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The business car industry has come together to launch a scathing attack on HM Treasury over the Government department's repeated delays in publicly confirming vital details of the new capital allowance regulations.
The BVRLA and ACFO have taken the unprecedented move of jointly releasing part of an email from Treasury official Michael Swan, revealing details of the new tax plans that Treasury is refusing to publicly confirm.
The revelation comes in an open letter from ACFO chairman Julie Jenner and BVRLA director general John Lewis.
Treasury's document reveals the new capital allowance tax regime due to start from April 2009 will only be applicable to vehicles registered as new after this date. Despite several requests, the department has declined to clear up the confusion.
Treasury's feet-dragging could potentially cost fleets and the business car industry dear because without an announcement forward planning to keep tax costs low becomes impossible.
The business car industry's long-term nature means that decisions made now can have implications for the next three years or more. There has been talk of lease firms increasing rates on current models due to the uncertainty on how allowances would be applied going forward.
The capital allowances - or writing down allowances - changes were announced in the 2008 Budget, but did not make clear when vehicles would be covered by the changes. This led to many experts predicting a rise the leasing costs of cars above 160g/km.
Two main changes were revealed. The 10% (161g/km+) and 20% (160g/km and below) writing down rates are both lower than the previous rate of 25%, and cars will be pooled with other assets, which means there is no balancing allowance when the car is sold.
BusinessCar's finance expert Rupert Saunders explained: "So, whereas in the past, the full depreciation of the car could be claimed against tax over its business use (say, three years), from April 2009, businesses could be claiming remaining allowances for years after the car is sold."
HM Treasury failed to respond to BusinessCar's enquires on the subject and also refused a request to interview Michael Swan, the Treasury official in charge of the capital allowance regulations.
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