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BUDGET 2011: Clarity concern over future BIK rates, says ACFO

Date: 24 March 2011

Concern regarding the advance notification of company car tax rates, which has slipped from a three-year to a two-year cycle, continues according to ACFO chairman Julie Jenner.

"ACFO is pleased that, as we requested, the Government has announced company car benefit-in-kind tax rates for 2013-14, though we remain concerned that advance notification of rates has slipped from a three-year to a two-year cycle.

"Many employees have their company cars replaced on a four-year cycle so they remain in the dark as to what their benefit-in-kind tax burden will be in the fourth year.

She continued: "For example, an employee choosing their company car today for delivery early in the 2011-12 financial year and expecting not to replace it until 2014-15 still has no clarity as to what their future tax bill will be."

The organisation is also calling for "a more subtle approach" to AMAP rates, rather than the current two-band, single mileage threshold system.

"While ACFO acknowledges that fuel rates have increased significantly and AMAP rates have not increased since they were introduced in 2002, we continue to believe that a restructuring of the system is required, rather than the continued 'broad brush' approach taken by Government," said Jenner.

She added that ACFO is pleased the government has cut fuel duty by 1p ann dropped the planned 1p per litre above inflation increase scheduled for next month, and "welcomes the introduction of the Government's fair fuel stabiliser and removal of the fuel duty escalator".

"However, we would question how effective this measure will be, given that fuel duty increases have been announced for future years starting on 1st January 2012.

She concluded: "it remains absolutely essential that all fleet decision-makers continue to focus on cost management. It is difficult to believe that with the unrest in the oil producing countries of North Africa and the Middle East that fuel prices will fall significantly in the short term."

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