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Taxation: Company car tax squeeze hurts UK

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By Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association

The vehicle rental and leasing industry contributes nearly £25 billion to the UK economy, and is responsible for more than four and a half million of the newest, safest and cleanest vehicles on UK roads.

It plays an absolutely vital role in providing cost-effective and sustainable transport to UK businesses and consumers, but this business model relies on a fair and simple system of taxation. Recent experience has taught our sector to be very wary whenever the Chancellor of the Exchequer stands at the despatch box.

George Osborne walked a tricky tightrope with this year’s budget. Faced with a climate of increasing economic uncertainty, he wanted to address the deficit while balancing the needs of UK businesses taxpayers and welfare recipients.

Mistakes can be made, and the Chancellor has already abandoned his plans to cut disability payments. But he also missed a great opportunity to reverse some poorly devised changes to company car tax.

Last year, he announced that company car tax bands would rise by two percentage points from 2017, and the 3% diesel supplement would remain until 2021. The cumulative effect of these changes is that the average diesel company car driver will pay £626.94 more tax in 2017/18 than in 2013/14.

Company car drivers are being hit with a series of tax rises that are both unfair and poorly signposted. The Treasury continues to squeeze this vital business sector, with negative consequences. Since 2005, we have seen a steady increase in the benefit-in-kind tax bill for company car drivers, and a gradual decrease in the number of people paying it. We believe that there has been a significant transition to grey fleet, with company drivers choosing more and more to use their own vehicles.

As well as contributing less to the Exchequer, these vehicles are older, more polluting and less safe than their company car counterparts.

So please think again, Mr Osborne. By working with the fleet industry rather than against it, you can tackle the deficit and make UK roads cleaner and safer at the same time.

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  • bob - 28/04/2016 21:11

    Bravo! 100% agree. I don't expect any mercy from the chancellor though. I hope fleet operators can instead show some mercy on their drivers and try to find ways to help them keep tax down. Grey fleet? oh if only my company allowed such freedoms! thousands of pounds of my money I could keep instead of donating to the NHS to pay for someones gastric band!

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