ACFO presents Chancellor with five-point Budget action plan

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The organisation has outlined a five-point action plan that it would like answered by Chancellor of the Exchequer George Osborne in the coalition Government's Budget statement on Wednesday 23 March, covering:

• Company car Benefit-in-Kind tax rates for at least 2013/14 and ideally 2014/15 as well. Rates are known for the next two financial years – 2011/12 and 2012/13 – but employees now deciding on their next company cars remain in the dark as to how much their tax bill will be from April 6, 2013.

• The removal of the outdated and inappropriate 3% company car benefit-in-kind tax surcharge that applies to all diesel cars

• Cancellation of the inflation rate + 1p a litre fuel duty rise scheduled for April 1, which could add around 5p to the cost of a litre of both petrol and diesel

• Vehicle Excise Duty for sub-3.5 tonne light commercial vehicles to be linked to their carbon dioxide (CO2) output in a similar structure to cars thus incentivising the uptake of low emission vans

• A full review of the Approved Mileage Allowance Payments (AMAPs) system.

Referring to AMAPs, Julie Jenner, ACFO chairman, said: 'Rates should be set at levels so that they genuinely reimburse drivers for the cost of running a car. We also believe they should be aligned to a vehicle's CO2 emissions so they encourage the uptake of low-emission vehicles.

'The AMAP system is a very blunt instrument with only "low administrative requirement" as a redeeming feature. It is therefore time for a thorough review of the structure of the rates and how they relate to other systems in use to achieve business travel.'

Commenting on the historic 3% Benefit-in-Kind tax supplement applying to diesel company cars, she said: 'This has been a feature of the current tax system since it was introduced in 2002. At the time diesel cars were nowhere near as environmentally efficient as they are today.

'As diesel cars have lower CO2 emissions than equivalent petrol engine models drivers should not be financially penalised for selecting them.'

In the last decade, successive Governments have announced company car tax benefit-in-kind rates on a three-year cycle so drivers knew where they stood for at least the majority of their use of the vehicle.

However, said Ms Jenner: 'That routine has broken down. It is a concern that employees are taking delivery of new cars now and have no idea of how much tax they will be paying on a vehicle they will still be driving in 2013/14. Additionally, with some company cars now being driven into a fourth year it would be helpful if rates were announced on a four-year cycle.'

She added: 'And, as linking car-related taxes to CO2 emissions has successfully driven down new car emission levels over successive years it makes clear logical sense to take similar action with regards to vans, starting with Vehicle Excise Duty.'

Finally, ACFO has joined the growing call from business representatives for the Government to axe the planned April 1 fuel duty rise.

'Amid continuing economic uncertainty, rising inflation and businesses struggling to contain costs it makes no sense to heap further financial pressure on companies through the tax system,' said Ms Jenner. 'The planned rise should be axed.'

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