Fleet News

Budget 2004: Freeze on CO2 tax bands surprises industry

GORDON Brown surprised the fleet industry when he announced a freeze on CO2 tax bands for 2006/2007 in the Budget.

The announcement is part of an official commitment to give fleets a three-year programme for company car tax, as drivers have to make a long-term commitment when choosing a business vehicle.

Before the Budget, Brown had come under pressure from all sides of the motoring industry not to change the tax bands.

Stewart Whyte, director of Association of Car Fleet Operators, said: 'It is what ACFO called for and we are delighted the Government has listened.

'We hope our calls for longer-term strategic stability have finally been heeded and that the Treasury departments will now give us at least one full replacement cycle as a preparation time.'

ACFO has argued that fleets buy and operate the most environmentally-friendly cars in the UK, but they could only do that if vehicle technology continues to move forward. In private meetings with Government, they had revealed that year-on-year increases in company car tax were moving ahead of available clean technology. John Lewis, director general of the British Vehicle Rental and Leasing Association, had also joined the industry call for a freeze.

He said: 'The effectiveness of the present rates is clearly demonstrated by the exceptionally high levels of diesel-engined vehicles being taken on to fleets which in some cases exceeds 75% of all new contracts.'

The BVRLA felt that increasing rates would have had an unnecessarily harsh impact on the company car driver. The freeze could reinforce a growing move back to company cars that the BVRLA has already noted.

Nigel Underdown, head of customer relationships, Bank of Scotland Vehicle Management, said the announcement showed the Government had accepted 'enough is enough'.

BIK from April 2004
P11D % to be taxed CO2 (g/km) CO2 (g/km) CO2 (g/km)
2003/04 2004/05 2005/06
15* 155 145 140
16* 160 150 145
17* 165 155 150
18* 170 160 155
19* 175 165 160
20* 180 170 165
21* 185 175 170
22* 190 180 175
23* 195 185 180
24* 200 190 185
25* 205 195 190
26* 210 200 195
27* 215 205 200
28* 220 210 205
29* 225 215 210
30* 230 220 215
31* 235 225 220
32* 240 230 225
33** 245 235 230
34*** 250 240 235
35**** 255 245 240
Diesel supplements: * add 3% if a car runs solely on diesel and is not Euro IV compliant
** adds 2% if car runs solely on diesel
*** add 1% if car runs solely on diesel
**** maximum charge so no diesel supplement

  • NB: Exact CO2 figure should be rounded down to the nearest 5g/km
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