Fleet News

Budget deals blow to personal motoring schemes

THE 1999 Budget has failed to act as a catalyst for company car drivers to opt for personal motoring schemes. Company car drivers covering more than 18,000 business miles a year bore the brunt of the Budget's tax rises, and these drivers are the least appropriate converts to personal contract purchase or personal leasing schemes.

They still qualify for a substantial tax break, and employers still seem keen to keep closer control over the cars driven by essential users than those in the 'perk' sector. Ironically, the prime target market for PCPs, drivers who cover fewer than 2,500 business miles a year, were the only company car drivers not to be affected by the Budget's changes.

They will continue to incur a taxable benefit of 35% of the list price of their car, and depending on the car they drive can even envisage tax cuts when the new tax system comes into effect in April 2002, if the model in question has a good environmental performance.

If Chancellor of the Exchequer Gordon Brown does incentivise drivers to select cars with good carbon dioxide emissions, then drivers of turbodiesels from Mercedes-Benz, BMW and Audi should qualify among the higher bands for tax reduction. And as the Government phases out the benefit of having free fuel for private motoring, more executives can be expected to opt for oil burners, but not out of their company cars.

This year's swingeing fuel duty rises also dealt a blow to PCPs, because the Government froze the rates at which employers can reimburse tax-free their staff for driving on business in private cars. This is the third year in a row that Fixed Profit Car Scheme rates have failed to rise, and while they were originally very generous - 63p per mile for the first 4,000 miles in a car with an engine bigger than two litres - the generosity is being rapidly eroded by pump price increases.

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