Fleet News

Tax considerations 'critical' managers told

Fleet managers have been told they must consider forthcoming tax changes and the used car market when organising renewals.

Professor Peter Cooke of the Centre of Automotive Management at the University of Buckingham warned that the tax changes will have a “significant impact” on the fleets.

“Tax will start to have a significant impact in the next year and I’m not sure that all fleet operators have really thought about this,” he said.

“Next year’s Vehicle Excise Duty and Capital Allowance changes could change the shape of the fleet market completely.

“Fleets are unlikely to change their current investment cycles but as they begin to look at replacement they need to think about the coming changes.”

2009 will see the introduction of six new VED bands for new cars.

Vehicles emitting more than 225g/km of CO2 will cost £425 more to tax.

Capital allowance rates will also change in favour of greener vehicles.

Only 10% of the value of vehicles emitting more than 160g/km of CO2 will be tax admissible, compared to 20% of those that are sub-160g/km.

“Fleet operators have to realise that whereas once upon a time they saw VED as a front end, immediate consideration in vehicle choice, now it’s a whole life cost consideration.

“VED will have a profound effect on fleet procurement and you have to factor VED into vehicle choice,” he said.

Not only will environmental considerations be important when calculating the tax and running costs of new fleet vehicles, they are also gaining more weight in the used market, which may affect residual values.

Recent figures from BCA show no signs of recovery in the used market.

Fleet and lease vehicle values fell again in August, knocking around £74 off the price of ex-fleet stock.

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