Fleet News

Budget 2003: fleets hit with fuel price rise

FLEET fuel costs are set to rise under measures announced in last week's Budget – but Gordon Brown has deferred the price increase until October.

For a fleet of 100 vehicles – 60 petrol and 40 diesel – the rise of 1.28p per litre for both petrol and diesel amounts to more than £3,000 a year if the vehicles cover 18,000 miles a year and achieve an average 30mpg for petrol and 45mpg for diesel.

Danny Clenaghan, Arval PHH's managing director of fuel and business mobility, said: 'It would have been nice for fleets if Brown had announced a temporary reduction in fuel prices, say for six months, while they remain high. He's obviously assuming the price will drop over the next couple of months ready for when the Budget price increase comes into effect.

'This announcement is another burden for fleets but at least the increase won't happen until October.'

Environmentally-friendly fuels formed a major part of Brown's Budget and he revealed new fuel duty incentives for sulphur-free fuels. The Government said it had held discussions with the oil industry and vehicle manufacturers for the introduction of duty differentials to 'maximise environmental benefits'.

As a result, it said, from September 1, 2004, sulphur-free fuels will be 0.5p lower per litre than for ultra-low sulphur fuels.

Brown also confirmed that the Government will set the duty rate of bioethanol as a road fuel at 20p below the prevailing ultra-low sulphur petrol duty rate from January 1, 2005.

In a statement, the Government said: 'This differential will help to offset the additional production costs of bioethanol and allow the UK to benefit from the reduction in greenhouse gases and local pollution that it can offer.'

The cost of biodiesel, which last year was set at 20p per litre below duty on ultra-low sulphur diesel, will rise by 1.28p per litre from October 1.

New VAT rates for employers
Vehicle 12 month (£) 3 month (£) 1 month (£)
Diesel
2,000cc or less: £900 £225 £75
More than 2,000cc: £1,135 £283 £94
Any other engine
1,400cc or less: £950 £237 £79
1,400cc - 2,000cc: £1,200 £300 £100
More than 2,000cc £1,770 £442 £147

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