“The pre-Budget report holds little by way of surprise in relation to cars and business travel.
“It defers any decision on the future of AMAPs (approved mileage allowance payments) and the relief available to employers in respect of company cars (capital allowances),” said Alastair Kendrick, partner, Bourne Business Consulting LLP.
While the tone of Mr Darling’s speech was overtly green, he failed to deliver much of substance in that respect for fleet operators.
“The real news is that there is nothing in the pre-Budget report that changes the fact that the company car is the most cost-effective and efficient form of personal transportation available to businesses,” said Andy Leech, business leader at cfc solutions.
The most significant change was to the fuel benefit charge multiplier, which increases to £16,900 next April.
“While this is in line with the change in the retail price index,1 it will still come as a significant tax burden to many drivers,” said David Brennan, managing director of LeasePlan.
The change should result in a 17% increase in an employee’s annual tax charge.
“This benefit was already relatively unattractive and becomes more so from April 6, 2008,” said Tony Hannon from Baker Tilly.
“Anyone currently receiving private fuel should carefully review the arrangement to ensure it remains beneficial.”
Mr Darling also said that recommendations contained in the final Stern environmental report will be included in the upcoming Budget.
Therefore, fleet operators should still expect significant reform of the company car tax system next April.
Commenting on the Chancellor’s speech, PricewaterhouseCoopers said it was surprised not to see definitive announcements on company cars, although it did point to a number of previously announced changes.
These include the starting point for the new 15% band for CO2-based taxation being reduced to 135g/km; and the introduction of a new 10% band for cars with CO2 emissions of less than 120g/km.
This means that a £10,000 company car can be offered to an employee for £200 in tax a year.
The Chancellor’s announcement that he will not to impose a benefit-in-kind charge on Employee Car Ownership (ECO) schemes was welcomed.
“We are pleased that, at last, the Chancellor has seen fit to recognise ECOS for what they are – genuine ownership schemes,” said John Lewis, BVRLA director general.
However, the Chancellor is still considering changes to AMAPs. “It is inconceivable why, despite the amount of evidence provided by the industry, the Government is keeping us in the dark.
“There is no further information that the Government could possibly want in order to come to a proper conclusion,” added Mr Lewis.
The Chancellor is also considering incentivising the early uptake of Euro V and Euro VI technology, and he is doubling the transport budget so widening of motorways such as the M25, M6 and M1 can take place, although this won’t be until 2010.