A further 1% company car tax rise is due in 2013/14 and ACFO has already called on the Government to announce in the spring Budget benefit-in-kind tax rates for the following three or four years to aid vehicle selection planning by employers and employee alike.
Meanwhile, the New Year could be the year when fleet demand for the new breed of electric cars truly takes off.

Until now only pure electric cars have been available as an alternative to petrol or diesel powered models, but 2012 is due to see the arrival of plug-in hybrid (Toyota Prius and Volvo V60) and extended range models (Vauxhall Ampera and Chevrolet Volt).

"Pure electric vehicles may be suitable for some urban, low mileage fleets, but for the vast majority of businesses they are not viable on a number of counts including operating costs, residual value uncertainty, range and the lack of a viable recharging infrastructure," said Jenner.

"However, the imminent arrival of plug-in hybrids and vehicles equipped with range extenders make the electric option a more realistic alternative for many fleets as some of the concerns, particularly around driving range and recharging, are overcome.

"As these vehicles still have an internal combustion engine they will provide a useful stop gap for fleets that want to show their environmental credentials until fully-fledged electric vehicles are a more viable option."

Despite the imminent arrival of such vehicles the Government has yet to announce funding levels to aid their acquisition through the Plug-In grant scheme. Tax incentives of up to a maximum of £5,000 have only been agreed until March 31, 2012 with a review due early in the New Year.

Jenner said: "The Government has a clear carbon-cutting agenda but in announcing future benefit-in-kind tax levels for petrol and diesel powered models as well as the new breed of electric alternatives, the tax structure must not run ahead of technology.

"Company car drivers and businesses require a vehicle choice and if choice is restricted and tax bills become too punitive, the Government risks driving employees into cash alternatives. That is accompanied by inherent risks ranging from reduced revenue flowing into Government coffers to drivers selecting older cars with higher emissions and fewer safety features than if they had stayed in company car schemes."

With reference to the Plug-In Car Grant scheme, Ms Jenner said: "An initial £43 million pot was set aside to fund electric car acquisition, but demand has been so low that only around 1,000 vehicles have been bought. However, that should not put the Government off continuing to fund the scheme.

"The fleet industry requires certainty and the ability to plan for the long-term. That can only come with the Government committing to retaining the scheme for several years and announcing grant levels for the next three or four years and not on an annual basis."

Finally, in reference to the Government's Autumn Statement decision not to cut fuel duty immediately, Jenner said: "Fuel prices at current levels are simply unsustainable. We hope fuel prices will fall in the New Year and that will have a positive impact on the economy and cash flow for businesses and private motorists alike.

"However, if there is no respite then the Government must look again at its fuel duty strategy in the spring Budget. We are very mindful that in the Autumn Statement the Government did not cut duty but merely dropped a January 2012 increase and reduced the planned August rise from 5p a litre to 3p a litre - pump prices need to fall."