Fleet News

BIK changes will have zero effect on drivers

FLEETS do not expect to make any immediate changes to their company car policies in the light of the new benefit-in-kind tax regime. Amid a host of personal taxation changes, including a new 10p starting rate of income tax, some commentators even questioned whether drivers would notice the slight rise in their company car tax bills.

As one expert pointed out, drivers who are really conscious of cutting their company car tax bills could just choose a model in flat rather than metallic paint, or forego a CD-autochanger to remain in a tax neutral position. Clive Tulloch, tax partner at PricewaterhouseCoopers, said he did not expect the company car changes up to 2002 to make a difference to fleet or driver decisions, but questioned whether the Treasury would further reduce the mileage discounts in subsequent Budgets leading up to the April 2002.

The Treasury's forecasts estimate the tax changes will raise an extra £270 million in the 1999-2000 tax year, £265 million in 2000-01, and £260 million in 2001-02. But Chancellor of the Exchequer Gordon Brown has promised that the new system to be implemented in April 2002 will be revenue neutral to the Treasury, so it's in his interest to increase the tax take from company cars as much as possible in the interim.

'There will be drivers complaining about the reduction in mileage discounts, and I wonder whether the Chancellor is going to phase them out completely,' said Tulloch. 'There may not be any further movements between now and 2002, and I don't think it will mean short term changes in buying decisions, nor do I think it means a move to or away from company cars. That's purely a decision about whether company cars are an appropriate way of getting employees about and benefiting them, or not.'

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