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BUDGET 2011: Costs of running fleets to rise

Date: 23 March 2011   |   Author: Rupert Saunders

The cost to companies of providing business cars for staff is to rise from this April, the Chancellor confirmed in his Budget speech.

Osborne said the planned rise in National Insurance rates will go ahead despite some speculation that they would be postponed or even scrapped altogether. This means that companies will pay an extra 1% on the Class 1A rate on employer provided benefits.

The rate, which has stood at 12.8% for at least the last three years, will now rise to 13.8% for 2011/12.

Employees' personal Class 1 rates will also rise (from 11% to 12%) which will swallow up some of the gain from the £1000 increase in personal tax allowance. Although the Chancellor emphasised this change, it had already been announced in the emergency Budget last year.

Personal allowances from 2012 will rise by a further £630, taking the starting point for income tax to £8015 a year.

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