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Budget provokes CO2 'wasteland' warning

Date: 18 March 2008   |   Author:

Alison Chapman, Deloitte & Touche

Hidden beneath the headlines of Chancellor Alistair Darling's first Budget was the announcement most likely to have the biggest impact on fleet car operators.

Tax expert Alison Chapman (pictured) predicts a "wasteland" of cars emitting slightly above 160g/km because corporation tax relief for companies will change from 1 April 2009, and 161g/km cars and above will cost the company significantly more to run.

"As a result I expect a range of cars to no longer have a market within the mainsteam company car arena, although it will take time for companies to realise the effect," said Chapman of accountancy firm Deloitte. "You have one car at 160g/km and another at 161 and the company will say to the driver that they don't want them to have the higher emitting car."

The BVRLA and ACFO echoed worries about the new scheme.

"He [Darling] failed to appreciate just how much of a cliff edge is going to form and the impact it would have on the marketplace," said BVRLA boss John Lewis, who wanted at least two break points to ensure a smoother transition between different brands.

ACFO agreed, calling for a tiered system as from a company's tax viewpoint the Government's decision makes no distinction between 161g/km and vehicles emitting over 200g/km.

ACFO also slammed the long-awaited decision on Approved Mileage Allowance Payments for drivers using their own vehicles on company business. "At least they've made a final decision, but it doesn't go far enough," said chairman Julie Jenner. "While the rest of the Budget talks about 2011 or 2012, this doesn't give a long-term view."

Other Budget details buried away in the small print included the expected announcement that the 15% BIK band will drop to 130g/km for 2010/11.

For more on the Budget visit