Fleet News

Company car tax: Increases ‘ill thought out’

Simon Hill, Total Motion.

Simon Hill, managing director at Total Motion, looks at company car tax rises

The changes to company car tax for both the employer and employee that come into force over the next 5 years are ill thought out and will lead to increased emissions, the take up of tax avoidance schemes and reduced government income - not to mention having a negative impact on road safety.

There is already a ticking time bomb around grey fleet and this just makes the whole situation worse.

After over a decade of a fair system, the changes are not only badly thought out, but also disproportionate in terms of the increases for employers and drivers alike.

The decision is not only out of step with the rest of Europe but almost all of the developed economies of the world

The impact of the changes will include:

  • Increased CO2 and NOx emissions
  • Reduced tax income
  • Increased council and government cost of admin
  • Increased accident rates and the risk to the road using public
  • Reduced revenues for the UK motor industry and foreign investment in R & D

The UK economy relies heavily on the motor industry and significant changes to the tax regime can affect research into new fuels and electric vehicles, which we not only need for the economy, but the environment as well.

It makes the electric and hybrid option (which is cleaner) less of an incentive and could drive many towards using commercial vehicles, which are less fuel efficient, higher on emissions and less safe.

The average employee is going to see around a 10% increase in their company car tax and employers between 8-16%.

While it is understandable to increase the tax rates on higher omitting vehicles, the blanket approach that has been adopted penalises everyone including those that have invested in greener vehicles.

The chancellor should take the opportunity in the next budget to fine tune the changes and focus more on the dirtier vehicles before we go too far down a path that could in effect lead to an increase in so many areas including road deaths and injuries.

This increase just does not make sense in particular in a time of such uncertainty after the Brexit vote.

At a time when there is a focus on reducing admin and red tape for business, this will increase it.

 

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