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Rise in NICs poses bigger threat than fuel duty

By / 8 years ago / Latest News / No Comments

So says Lex Autolease, which warns that fleets need to take action to minimise the pain of higher NICs.

On 1 April, the Government is expected to increase fuel duty by 1p per litre which will increase prices at the pump by 3-4p. Coupled with this, employers face an increase in NICs from 12.8% to 13.8%.

The joint impact of these tax measures will add almost £5,000 to the cost of running a fleet of 50 vehicles, £22,000 on a 250-fleet and almost £90,000 for a company with 1,000 vehicles.

Yet although there has been much talk of how fleets will be hit by increased fuel duty, the impact of NICs is hidden in many ways, according to Andrew Hogsden, head of financial consultancy at Lex Autolease. He says: 'It doesn't grab the headlines or provoke protests like fuel duty. But, for businesses large and small, it will have a far bigger impact on the bottom line than the forecasted hike at the pump.

'We estimate that NICs will account for almost 60% of the total tax increase and the key way to really tackle this is by getting your drivers into less-polluting vehicles. Anybody looking to order a new car now, should be looking even closer at its performance in terms of taxable emissions.'

Top tips for tackling NICs

• Introduce a choice of lower-emitting vehicles to directly reduce employers' exposure to National Insurance costs.

• Highlight the financial savings to employees of choosing a greener vehicle through lower Benefit in Kind tax.

• Factor NIC costs into your fleet policy to ensure the "whole-life cost" of each vehicle choice is clearly understood and financially accounted for.

• Consider introducing NIC-lowering schemes such as salary sacrifice, which are popular methods of funding childcare vouchers and pensions, but now also available for cars.

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