Fleet News

Plan for van taxation changes, fleets urged

FLEETS are being urged to prepare for one of three scenarios when changes to van benefit-in-kind taxation come into force next year.

From April, drivers face a hike in tax from £500 per year to £3,000 per year – and this could cost companies an extra £1,000 a year for every driver, fleets have been warned.

This cost increase is one of three scenarios highlighted by vehicle fleet management company LeasePlan.

The company is urging employers not to put off planning for the transition until next year.

LCV manager Steve Crawshaw said: ‘April 2007 may seem a long way away, but businesses need to decide right now how they want to manage the tax change. If they’re going to pay drivers more, or provide overnight parking for their vans, their annual budgeting cycles mean they need to start working on the new arrangements over the next few months.

‘Leaving it until January or later is going to cost them a lot more and could result in a lot of unhappy employees come next April. It could also lead to serious legal implications if it isn’t managed properly.’

Three scenarios facing business

1. Drivers ask to be paid extra to make up for their increased tax liability. For a 22% taxpayer, that means £1,000 a year (gross) added to their annual salary.

2. Drivers decide to use their vans more while not at work, to get their ‘money’s worth’ from their higher tax bill.

LeasePlan says: ‘This means the vehicles have more wear and tear and face increased health and safety issues. Every extra pound a company spends on maintenance and driver safety directly affects its bottom line.’

3. Drivers decide they don’t want to pay the higher tax charge, so they leave their vans at work at the end of the day rather than taking them home.

LeasePlan says: ‘This presents firms with the dilemma of having to find secure overnight storage for dozens or even hundreds of vans. In addition, they may also need to find parking space during the day for the cars their drivers now use to commute.’

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