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ACFO: Lack of Government clarity over BIK rates puts industry in uncharted territory

Date: 20 December 2010

"There's a fine balance between the company's need to save money and the need to attract and retain good staff," says Julie Jenner, ACFO

Fleet operators' association ACFO is looking to forge a working relationship with Government in 2011, after a lack of "face-to-face dialogue" in the first six months of the new coalition's ruling.

Though ACFO has been able to discuss issues with civil servants, the goal is to re-establish links with ministers in the run-up to March's 2011 Budget statement.

ACFO's particular areas of concern surround advisory fuel rates, company car tax rates from 2013/14 and guidance on long-term motoring taxes as a whole.

ACFO chairman Julie Jenner is concerned that benefit-in-kind tax payment bands on company cars have only been set out for the next two years. "Historically, the Government has always announced company car tax benefit-in-kind rates on a three-year cycle so drivers know where they stand. However, that routine has broken down," she said. "It is a concern that employees are taking delivery of new cars now and have no idea of how much tax they will be paying on a vehicle they will still be driving in 2013/14." Jenner is looking to explain the importance of clarity and reasonable notice to ministers, and said both ACFO and the industry as a whole is in "uncharted territory" due to the lack of dialogue with, or indication from, the new Government as to its BIK intentions.

The association is also unhappy with the latest AFR rates, which are those paid to company car drivers for business miles, with rises of no more than 1p per mile at a time where there has recently been one fuel duty rise with another one due for January. "Where is the justification for the new rates?" said Jenner. "We want to question the formula used to calculate the rate directly with ministers. The new rates, which are due to be in place for six months, will undoubtedly leave drivers out of pocket."

Jenner also predicts a return to a more standard three-year change cycle for company cars, with some fleets that have extended out to four or even five years during the recession finding rising maintenance costs and impacts from either HR or business perspective of employees driving older vehicles, and said more fleets could move from a sole supplier arrangement to two or three suppliers. ""Fleets that rely on a sole supply arrangement have no options available if their vehicle leasing supplier finds that their credit terms tighten significantly," she said. "By taking a safety first approach and introducing more suppliers any risk is potentially reduced."