Fleet News

Rental rates to rise after Budget move

FLEETS face a sharp and immediate increase in daily rental rates following accounting and tax changes introduced in the recent Budget. Industry predictions on the impact of these changes go as far as double digit percentage increases on rental rates, as a direct result of Chancellor Gordon Brown's clampdown on accelerated capital allowances for finance leases through multiple year end companies.

The British Vehicle Rental and Leasing Association estimates the new regulations will cost its members an extra £42 million a year, and rental companies have been the first to feel the effects. This is the second major financial hit on rental companies in 1997, following the increase in Insurance Premium Tax to 17.5% in April

Doug Sawers, Europcar's operations and fleet director, said a 5% increase in rental rates was required simply to cover the loss of the beneficial capital allowance regime, and that the eventual figure could be as high as double figures. Frank Armstrong, president of Alamo Europe, estimated the recent changes would add 2% to the company's interest charges - about an extra £3 million per year.

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