Fleet News

Company car tax and sal/sac top list of concerns for the new year

Changes to company car tax and salary sacrifice rules will be the biggest challenge that fleet operators will face in 2017.

According to a Fleet News poll the changes announced in the Chancellor of the Exchequer’s autumn statement – which will affect salary sacrifice and cash-or-car schemes  – are expected to cause the most headaches for fleet departments (43.2%) this year.

Matt Sutherland, chief operating officer at Alphabet, said:  “A significant concern is that with the additional complications in company car taxation, announced from April 2017, we could simply see organisations offering less choice to employees for company car options, resulting in a big shift into ‘cash-for-car’ schemes.

“The consequences of which would be to increase existing grey fleet problems by putting older, more polluting, less reliable and less safe vehicles on UK roads.”

Furthermore, rising benefit-in-kind (BIK) bands will take a u-turn in 2020 dropping from 16% to 2% for the lowest emitting models (0-50g/km) – reducing the incentive for drivers to switch to plug-in vehicles until this point.

With fuel prices predicted to rise (see page 8) 18% of respondents said fuel costs will affect them the most this year, despite it being the seventh successive year fuel duty has been frozen.

James Monks, finance director at vehicle tracking service provider RAM Tracking, said: “Despite the freeze, fuel is expected to continue to rise and costs have been impacted by a 19% pump price increase since February 2016.”

Other pressures on fleets, especially those operating within London, are likely to arise from Mayor of London Sadiq Khan’s assault on air quality.

He wants to speed up the introduction of central London’s Ultra-Low Emission Zone (ULEZ), implement a surcharge for the most polluting vehicles entering the city and propose a country-wide diesel scrappage scheme.

Caroline Sandall, deputy chairman of ACFO, told Fleet News: “We have already started to see a shift in selection of engine types and any further changes with regard to diesel uptake will further influence this trend.”

Real world emissions testing is also due to start this year and Sandall thinks many fleets may not be aware of the impact yet.

“This is going to be a major influencer in vehicle choice lists/selection but this is a largely unknown quantity and there is uncertainty over timescales.

“The scale of change informally quoted by some is considerable and we look to HMRC to ensure these changes are carefully considered for BIK tables to ensure fairness to drivers,” she explained.

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  • bob the engineer - 10/01/2017 17:13

    Sadly many fleets response to the climbing company car tax burden so far has been to just lower the permitted CO2 ceiling for their fleets (under the Eco justification) and say there you go, your not paying so much tax now! All this does is restrict choice! Its also a strategy that is rapidly running out of headroom as manufacturers are close to maxing out how much they can get out of a drop of fuel and how little CO2 it will give off. Yet the government shows no sign of its hell bent policy of milking the driver for every penny it can and the BIK rates are just going to keep going up and up. then what? the company car 'benefit' becomes a source of annual pay cuts! .. with no option to contain it, when we are all driving solar powered single seat Smart cars.. and still the rates go up... what then? roller skates? We need creativity, we need to take them the fight. I do a useful job out on the road, I am not a bloody cash machine for the government!

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