Fleet News

Van fleets face up to huge tax hikes

COMPANIES running some of Britain’s cleanest vans will see their costs rocket next year when a key tax incentive is scrapped.

Vehicle Excise Duty for vans meeting Euro IV standards is currently £110, a £60 discount on the standard rate of £170.

But from the end of the year, this discounted rate will be scrapped for new vehicles, effectively hitting fleets with a 54% tax increase.

The government says the incentive was a short-term measure to encourage early adopters of the latest technology, but critics say the impact is worse because it coincides with major benefit-in-kind tax changes to vans.

The hike will be part of a double tax burden to hit some van fleets next year, as drivers who have private use of vehicles will see their tax liability soar from April from £500 to £3,000, which will also push up companies’ National Insurance contributions.

One fleet manager, who asked not to be named, said his fleet of 1,000 vans would be heavily hit by the changes as it renews its fleet.

He said: ‘We are facing a tax increase of more than 50%. I don’t think there is reasonable justification for this. We are now sourcing cleaner EU4 vehicles but are being penalised.’

The fleet is currently struggling with the impact of the benefit-in-kind tax changes that come into effect next year.

Another fleet manager said it was causing significant difficulties with drivers who were reluctant to give up private use but did not want to pay the increased tax.

In addition, if the issue cannot be resolved, the firm’s Class 1A National Insurance bill could rocket from under £64,000 to £384,000.

The fleet manager said: ‘Our running costs will increase considerably. This is unlikely to be absorbed and so will have to be passed on to the customer.’

A spokesman for the Society of Motor Manufacturers and Traders said the VED reduction was a good way of encouraging early adopters with financial savings compared to tax that would have been paid if the scheme had not been in place.

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