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TAX CHANGES 2013/14: The tax man cometh

Date: 26 March 2013

 

Fuel benefit

The fuel benefit charge is on its way up, too. The multiplier will increase from £20,200 to £21,100, which will subsequently up the driver's tax and the employer's National Insurance Contribution, in another move to discourage the provision of free fuel. 

Big changes are also afoot for the leasing companies next month. Regardless of how low a vehicle's emissions are, leasing firms will no longer be able to benefit from the first year's allowance, the upshot of which is a likely increase in rental costs to their customers.

"The removal of the 100% writing-down allowance for leasing companies is likely to have some impact on pricing," says Down. "We've not yet seen exactly how this will play out, and a lot of leasing companies have obviously kept it close to their chest. They may pass on the full cost to their customers, they may absorb it, or there might be a hybrid of the two. There's no clear view on how they will do it."

The new legislation applies only to cars acquired after 1 April. Where problems could arise is if deliveries or lead times are delayed, in which case fleets should review their contracts.

Hughes surmises: "It's a legislative change, so it applies to everyone. Some people might wish not to present it, but they will be affected by the way they fund that car.

Other organisations might be deciding to absorb it and take a loss, but then they may offset it in another way."

Future-proofing 

The next financial year's tax rules are yet another wake-up call to fleets that still haven't cottoned on to the Government's drive to get company car drivers into cleaner models. Ignore it at your financial peril, but don't consider it a cost inevitability because there are ways to duck under the changes and adapt to an altered tax infrastructure.

It's an over-used phrase in corporate car circles, but whole-life costs really are the answer. That's the consensus from the industry and those in the know about vehicle taxation.

Deloitte's Simon Down, senior manager on the firm's car consulting team, says: "Our mantra has been around whole-life costs and making sure you pick everything up. You can make your choice based on that and have certain budgets and still allow flexibility for employees in their car choice, but you know you're only paying for what you want to pay for.

"The alternative is trying to second guess which way the rules are going - you could implement a 120g/km cap, for example. But not many businesses do that. Some may want to be seen as pioneers and they might do it, but not many will.

"Future proofing is just down to whole-life costs. The rates are published so far in the future, so it's easier to plan."

Any business car operator worth its salt would do well to steer clear of old-fashioned procurement policies based on the likes of rental and P11D values. The advice is to operate a policy that is in tune with the direction in which emission-based taxation is headed, because it will self-police by offering cars that fit the bill and are cost-effective vehicles.

Zenith's Ian Hughes, commercial director at the leasing company, advises: "Put a cap on the choice list for a maximum of 130g/km. That will prevent an affected vehicle from coming onto the system. You could also introduce incentives for drivers to take lower CO2 cars.

"We've been advising a lot of people to cap at 130g/km. We've even been saying to go to 120g/km. The only thing yet to emerge is a wider choice of vehicles below the 95g/km mark, but that will come in time." 



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