Owner-drivers "will decline" under skimpier AMAP rates
05 October 2007
Author: Nick Gibbs
Likely Government scrimping of the advisory fuel rates will force fleet managers to rethink their policy on employee-owned cars.
That was the prediction of tax expert David Rawlings of Deloitte, who told an audience of fleet professionals at last week's BusinessCar Live he's expecting the AMAP windfall to end from the 2008 Budget.
"At that point there has to be an argument for putting people driving over 10,000 miles a year back into the company car market," Rawlings said. "The Government is not about to make [the AMAP scheme] more attractive."
His prediction is that the Government will announce either a cut in the 40p rate to a flat 25p, or reduce the 40p limit from 10,000 miles to 5000. The answer is expected to come in the pre-Budget announcement either in October or November, depending on whether there is an election.
Advisory mileage allowance payments - which are tax-free up to the limits - have contributed strongly to the growth in Employee Car Ownership Schemes, a trend that has unsettled the Government.
"The Inland Revenue says that reducing the levels drivers can be reimbursed before they start getting taxed will bring emissions down," said Rawlings.
Rawlings, who oversees the www.cartax.co.uk website, also warned companies to be switched onto the implications of the new road fund tax bands, which reward buyers who choose cars with low CO2 levels. "In the next three or four years, the low-tax impact is going to start having an influence on the behaviour of car buyers, which is going to have an impact on residuals. It's a clever stealth tax," he said.