Fleet News

Managers left in dark over benefit-in-kind tax changes

THE Government has been accused of leaving fleets in the dark over changes to benefit-in-kind rules which remove an important tax penalty for drivers of alternatively-fuelled vehicles. Since April 6 this year, the extra cost of converting or purchasing a clean-fuelled vehicle running on liquefied petroleum gas or compressed natural gas does not need to be included in a driver's benefit-in-kind tax calculation.

When the measure was announced in the March Budget an implementation date of April 6, 1999 was given, but an amendment tabled shortly after the Budget brought the date forward a year. However, fleets have been unaware of the change, leading to calls for better communication from Government.

The changes were revealed in a letter to another MP from Dawn Primarolo, MP for Bristol South and financial secretary to the Treasury. This was passed to Malcolm Noyle, Vauxhall's alternative fuels manager, by a client. Noyle said: 'It seems that certain people know this is going on and the rest of the world does not. This is a critical issue for fleets and I am surprised nothing more was said at the time that the changes were being brought in early.'

The effects are significant. For example, a Vauxhall Vectra 2.0i 16v LS costs £15,605 on-the-road, while the equivalent LPG model costs £1,950 extra, at £17,555. Assuming the driver covers between 2,500 and 17,999 miles a year and pays tax at 23%, BIK payments for the petrol-powered car would be £1,131, or £94.28 a month, but before April 6 this year a dual-fuel version would have cost £1,236 for the same driver, £105 a year extra.

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment

Comments

No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee