Currently, benefit-in-kind tax rates are known for a three-year period but the industry has dubbed this a ‘short-sighted approach’ and believes it is prompting an increasing number of drivers to opt out of traditional company car tax schemes and into cash-for-car schemes.
In a pre-Budget report submitted to the Treasury, the Association of Car Fleet Operators (ACFO) states: ‘Unless there is some broad reassurance provided for the company car benefit-in-kind regime for some years ahead, fleet operators and company car drivers will be encouraged to migrate out of conventional fleet systems into any of the various ‘individual ownership’ arrangements in the belief that they are both better off in tax terms, and free to express their choice in vehicles without any environmental pressure.’
Most fleets run vehicles on a three to four-year cycle which extends beyond the current published tax rates, making forward planning difficult.
The submission also says there is no case for a reduction in the tax year 2007/08 below the 140g/km of CO2 benefit-in-kind tax entry threshold set for 2005/06 and 2006/07 as the tax system should not drive environmental considerations ‘significantly faster’ than manufacturers can deliver.
In a Treasury submission, the Society of Motor Manufacturers and Traders (SMMT) is urging the Government to continue its drive with green initiatives and wants no further changes to car taxes announced in the Chancellor’s pre-Budget report on December 2.
It wants the current CO2 emissions threshold to remain at 140g/km for the 2007/08 financial year to prevent drivers opting out of company schemes into older and less efficient vehicles. An introduction of a fuel duty incentive for zero sulphur fuels should also be on the agenda, according to the SMMT. Chief executive Christopher Macgowan said: ‘The Government must now deliver clear incentives to motorists in order to increase the take-up of cleaner fuels and greener technologies.’
Earlier this month, Transport Minister David Jamieson gave his backing to company cars instead of cash as the greenest solution (Fleet NewsNet, November 18). He said: ‘Opt-out cars tend not to be as clean.’