Fleet News

BUDGET: Expert comment - Andrew Leech, Mycompanyfleet

Andrew Leech, business manager at Mycompanyfleet gives his opinion on today's Budget.

"The 2010 Budget was bad news for fleets with increases in BIK taxation, National Insurance Contributions, Vehicle Excise Duty and fuel excise duty all increasing cost pressures on UK companies and beleaguered fleet operators alike.

"However I give a cautious welcome to the fact that the planned 3p per litre increase in fuel duty was to be phased in over the next nine months, with a 1p increase in April, a 1p rise in October and a further 1p in January.

“However, while it is being phased in, it still adds up to 3p rise in vehicle excise duty in nine months, which is completely unjustified.

"The tax increases, many of which were announced in the Pre-Budget Report and confirmed by the Chancellor this week, will increase the need for tighter control by fleet managers, especially in the areas of fuel cost control, vehicle acquisition choice and better mileage management.

“There is little doubt that this Budget adds to the already considerable inflationary pressures that UK companies are facing. Tighter control of fleet costs, more targeted vehicle acquisition and model planning and better mileage management are now vitally important to maintain profit margins.

“The reforms to the BIK company car tax system confirmed by the Chancellor in the Budget increase carbon emission benchmarking by 1% per annum. This is a very clear signal to fleets to select low emission, more environment friendly vehicles if they wish to control their BIK and Corporation Tax liabilities.

"Mycompanyfleet wanted to see the introduction of a direct correlation between road taxes and investment in the UK’s roads infrastructure.

“But while the Chancellor made an announcement that £100m would be spend repairing the nation’s potholes and a £285m investment in the motorway network, including hard shoulder running, it is a drop in the ocean compared to the billions in tax revenue he takes from motorists through Vehicle Excise and fuel duty.

“If we had greater hypothecation of road taxes with roads infrastructure, instead of this money being used to fund other areas of Government expenditure, it would represent a much more equitable use of motorists’ money. Motorists would then stop seeing road taxes as a stealth tax, and our infrastructure would be greatly improved.

“The re-introduction of the fuel price escalator confirms that the Government is committed to increasing the tax burden which already makes our fuel prices the highest of all the major countries in Western Europe. Fuel tax is to increase by 3p per litre in the next nine months, yet now represents some 75% of the retail price of fuel.

“Fleet managers will need to act now to ensure they are not storing up an extra cost burden for their companies over the next three years."

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