Budget reaction

Julie Jenner, Chairman of ACFO: ‘Future changes in company car tax rates and capital allowances will drive fleet managers and drivers into lower emission cars at a faster rate. The Government’s decision to tighten company car tax rates by one percentage point up to the end of the 2014/15 tax year and then by two percentage points in 2015/16 and 2016/17 means that the lowest CO2 emitting vehicles will find their way on to fleet choice lists in a bid to keep tax bills in check. Similarly, far-reaching changes in capital allowance rates from April 2013 will have a similar impact with 130 g/km of CO2 becoming the de facto benchmark for company cars instead of the current level of 160 g/km. Additionally, the Chancellor’s decision not to extend 100% first year capital allowances on low emission cars to leased models may well see some fleets reconsider their options in relation to these vehicles. However, detailed financial modelling will have to be undertaken to calculate the impact of such changes. Finally, we welcome the Chancellor’s decision to remove the 3% diesel supplement on benefit-in-kind tax from April 2016, which is something that ACFO has been campaigning for many years. However, ACFO is disappointed that the Chancellor has decided to press ahead with theAugust 1, 2012 3.02p per litre rise in fuel duty. ACFO had called for the duty increase not to go ahead as, with fuel prices already at record levels, the rise will further impact on business costs.’

 

BVRLA: ‘The emissions-based company car tax system has been a little, too successful, resulting in a larger than expected fall in tax revenues. So it is no surprise that the Chancellor is continuing to incentivise further cuts in emissions by lowering the tax thresholds. We are delighted to see that the Government has responded to our calls for it to abolish the unjustified 3% diesel supplement, bringing diesel cars into parity with their petrol-engined equivalents by 2016. We also applaud the Government’s decision to listen to our calls and give employers and company car drivers a clear five-year signposting of future company car tax rates, which will enable them to choose a new, lower emission vehicle – lowering their tax bill at the same time. We are disappointed to note that leasing companies cannot claim 100% first year allowances. We will be lobbying Treasury to ensure that this discrimination towards leasing is reversed. The fleet industry coped with the introduction of the 160 g/km capital allowance threshold when it was introduced in April 2009 and it will cope with these ambitious new emissions targets. However the continuing application of the Lease Rental Restriction acts as nothing more than a double emissions tax on our customers. We will be vigorously lobbying to have this unfair fleet tax removed as we did with the 3% diesel supplement for benefit-in-kind cars. The Treasury has confirmed that this change will only apply to new cars purchased after April 2013 and we will work with them on transitional arrangements.’


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