Fleet News

Brown delays fleet decisions until Budget 2004

CHANCELLOR of the Exchequer Gordon Brown gave little away in his pre-Budget Report, with fleets having to wait for Budget 2004 to get the lowdown on issues affecting them.

The Government was expected to make announcements on a series of key issues affecting the fleet industry, including the future of support for liquefied petroleum gas (LPG), a potential new van tax regime, a new fuel scale charge and possible changes to company car tax.

In most cases, the message was simple – there will be an announcement in the Budget early next year. In some areas, this will create problems for fleets, most importantly when it comes to the fuel scale charge.

The new tax system for drivers receiving free fuel for private mileage is linked to the company car tax system, so drivers pay tax at their basic rate on a percentage of the nominal value of the fuel – currently £14,400. The percentage is decided according to their cars' emissions, based on the current company car tax bands.

Although the Government says it is committed to providing early warning on tax-related issues, fleets will have to wait until the Budget before they can tell drivers how much tax they will pay for receiving free fuel.

If the Budget is delayed until April, then drivers could be committing to receive free fuel without knowing whether they are actually receiving a benefit, or paying more in tax than the free fuel they receive is worth.

During the report, Brown also gave clear indications that the country was moving towards a referendum on joining the Euro, a statement backed by the publication of a draft Single European Currency (Referendum) Bill.

Christopher Macgowan, chief executive of the Society of Motor Manufacturers and Traders, said: 'The commitment to provide a three-year period of duty differential for alternative fuels represents significant progress. But the phasing out of the duty incentive for LPG will create difficulties for firms that have invested in bringing these technologies to market.'

Pre-Budget report summary

  • Alternative fuels framework: establishes a statement of principles to guide policy, commits the Government to provide a rolling three-year period of certainty on fuel duty differentials for alternative fuels and stresses the importance of life-cycle carbon emissions.
  • Road fuel gases: Duty on LPG would gradually rise during the next three years, but duty levels on natural gas will be retained.
  • Sulphur-free fuels: Duty differential for sulphur-free fuels of 0.5 pence per litre over ultra-low sulphur fuels from September 2004.
  • Bio-fuels: Examine ways of incentivising more environmentally and economically-efficient types of bio-fuel manufacture.
  • Company car tax: The impact of changes to the tax regime will be analysed before decisions are made on future changes.
  • Company vans: Budget 2004 will reveal the outcome of a review of company van taxation.
  • Lorry road-user charging: A progress report will appear in the new year, providing more details of the Government's implementation plans
    Source: Society of Motor Manufacturers and Traders

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