Fleet News

Budget plea for car tax changes

THE British Vehicle Rental and Leasing Association (BVRLA) is calling on the Government to use next week’s Budget to announce changes to company car tax, vehicle excise duty and corporation tax allowances.

It claims there are lessons to be learned from the introduction of the 3% diesel penalty surcharge, which resulted in a flood of orders just before the deadline.

Director general John Lewis said: ‘The way it happened earlier this year meant there was a pull forward into December of some 28,000 vehicles which will eventually result in substantial increased costs for those companies which did it, as they will be selling 2005 cars, instead of 2006 ones. It certainly doesn’t make much commercial sense.

But more importantly we have to have incentives to encourage early adopters especially as Euro V for cars is just around the corner. Without incentives there will be an inevitable last minute panic to meet the new regime instead of a smooth and orderly transition.’

The BVRLA is also continuing to lobby for multi-year VED licences for fleets and is looking for reform of the way that Corporation Tax (CT) is applied to vehicles.

Lewis said: ‘We have been arguing for wholesale reform. At the moment CT, as it applies to vehicles, is the only non-emissions based tax and importantly for the fleet industry, it actively discriminates against contract hire. We need to see the back of the £12,000 capital allowance limit and the scrapping of the rental disallowance.

‘We believe these should be replaced by a banded set of allowances based on CO2 emissions applied to all business cars. In one move we could help the Government meet CO2 targets, even out the funding method decision process and reduce the burdensome administration of the present CT arrangements. I think it could properly be described as a ‘win-win’ situation.’

Lewis said the BVRLA was disappointed that there were no signs of such a move in last year’s pre-Budget report.

Chancellor Gordon Brown will deliver the Budget on Wednesday.

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