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Fleets aim to beat VAT rise

One in four fleets intends to replace their vehicles early in an effort to beat the VAT rise to 20% in January, according to an online Fleet News poll.

This is despite the lead-in times for many models pushing expected delivery dates well into 2011, which means many fleets will still fall victim to the new VAT rate (Fleet News, July 8).

But Val South, fleet manager at Xerox, also warned fleets against changing their cars earlier than expected, because of the penalties they could incur.

“The early termination costs would far outweigh the savings on VAT,” explained South. 

Deloitte business car consultant Dan Rees claimed it would be a mistake to believe bringing forward an order adds up to an automatic benefit.

He said potential changes in residual values and National Insurance contributions could also negate any saving in VAT.

For all the latest company car tax news, come to the Fleet News company car tax section.

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