Fleet News

Fleets on tenterhooks over Budget

THE fleet industry is on tenterhooks waiting for 'the most important Budget for 30 years' which will be delivered by Chancellor of the Exchequer Gordon Brown on Tuesday. However, industry leaders say the majority of fleet managers, contract hire and leasing companies and vehicle manufacturers are totally unprepared for the changes in company car tax which Brown is expected to announce.

Details of the new carbon-dioxide-based company car tax, which was initially announced by Brown in the March 1999 Budget, are likely to form the fleet focus of Tuesday's announcement. The tax - which has been openly discussed by the Inland Revenue since being signposted a year ago - will come into force on April 6, 2002 and will apply to all company cars on the road irrespective of when they were acquired.

But this week the Society of Motor Manufacturers and Traders - which said the real-tax take from car and fuel benefits had increased since 1998 and high mileage drivers should not be excessively penalised under the change - said the Chancellor should 'commit to a detailed economic and environmental assessment of reforms before they are introduced'. Association of Car Fleet Operators director Stewart Whyte labelled Tuesday's Budget the most significant for the fleet industry since 1971, which was inadvertently responsible for 'the take-off of leasing' and the ultimate restructuring of the company car market.

'Tuesday's Budget will define the future shape of the company car market because we are moving away from the company car being taxed as a benefit to one where it is being taxed as a benefit with significant environmental consequences and that is a seismic shift,' said Whyte. 'Few people in the fleet industry have realised that the Budget will see root and branch changes to the company car. It is a reflection of the poor standing of fleet management.'

  • Following the Budget an online analysis from tax specialists at Deloitte & Touche will be posted on FNN. Click here for details.

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