Fleet News

Firms hit by bigger threat than fuel duty

Businesses face a huge hike in motoring costs next month, but fuel duty will not be the biggest culprit, according to Lex Autolease.

Figures reveal that firms could be hit with a spike in business costs caused by a double whammy of fuel duty and National Insurance contributions (NIC).

On 1 April, the Government is expected to increase fuel duty by 1p per litre which will increase prices at the pump by 3-4p. Coupled with this, employers face an increase in NICs from 12.8 per cent to 13.8 per cent.

The joint impact of these tax measures will add almost £5,000 to the cost of running a fleet of 50 vehicles, £22,000 on a 250-fleet and almost £90,000 for a company with 1,000 vehicles.

Andrew Hogsden, head of financial consultancy at Lex Autolease, says:

“In many ways the impact of National Insurance is hidden. It doesn’t grab the headlines or provoke protests like fuel duty. But, for businesses large and small, it will have a far bigger impact on the bottom line than the forecasted hike at the pump.

“We estimate that NICs will account for almost 60% of the total tax increase and the key way to really tackle this is by getting your drivers into less polluting vehicles. Anybody looking to order a new car now, should be looking even closer at its performance in terms of taxable emissions.”

Top tips for tackling NICs

  • Introduce a choice of lower emitting vehicles to directly reduce employers’ exposure to National Insurance costs
  • Highlight the financial savings to employees of choosing a greener vehicle (lower Benefit in Kind tax)
  • Factor NIC costs into your fleet policy to ensure the ‘whole life cost’ of each vehicle choice is clearly understood and financially accounted for
  • Consider introducing NIC lowering schemes such as salary sacrifice, which are popular methods of funding childcare vouchers and pensions, but now also available for cars

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