Fleet News

Mileage squeeze boosts purchase or hire as option

THE 1999 Budget has fundamentally changed the parameters of several critical fleet decisions. This is most significant in the size of cash allowances required to replace a fully expensed company car. The basis of these calculations was significantly altered by Chancellor of the Exchequer Gordon Brown's increase in company car tax for all drivers covering more than 2,500 business miles a year.

He also carried out his promise to increase by 20% the fuel scale charge on which drivers are taxed for receiving free fuel for private motoring. Colin Thornton, sales and marketing director of ACL, provided figures which showed that the cash option required to replace a fully expensed company car had changed by as much as 57% depending on a driver's personal circumstances.

High business mileage drivers covering more than 18,000 business miles are most affected by the changes, following a 29% increase in their benefit in kind taxation. ACL figures show that a driver covering 18,000 business miles a year in a £20,000 car, on a three-year/60,000 miles contract and enjoying free fuel for private motoring, would require only £454 to give up the car, 57% less than the pre-Budget figure of £1,073, if his business miles were reimbursed at full Fixed Profit Car Scheme rates.

A driver with the same car, but covering 6,000 business miles a year would, however, require only slightly less money post Budget - £6,386 compared to £6,782, a decrease of just 5.84%.And a driver achieving just 1,000 business miles a year would require just 1.87% less money post-Budget to swap a full expensed company car for cash - £9,080 compared to £9,253.

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


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