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BVRLA fears capital allowances changes could stall market

Date: 21 March 2012

The hefty changes to the capital allowance system announced in the 2012 Budget could lead to problems, according to the British Vehicle Rental and Leasing Association.

"The chancellor's enthusiastic efforts to drive down emissions-based capital allowances for company cars could be a step too far, too soon," said BVRLA chief executive John Lewis. ""The fleet sector is the only part of the new vehicle market that is still growing at the moment. It will adapt to the new tax regime as it always does, but these ambitious targets could bring a temporary stall to the market as businesses re-evaluate their fleet policies."

"The fleet industry coped with the introduction of the 160g/km capital allowance threshold when it was introduced in April 2009 and it will cope with these ambitious new emissions targets," he continued.

The removal of the company car exemption for electric vehicles from 2015 could "kill the electric market stone dead," according to Lewis. "We have already seen that the market for electric cars has got off to a slow start," he said. "By eliminating their company car tax exemption from April 2015, the Chancellor is getting rid of one of the main incentives for fleets to operate them."

He was also critical the absence of a cut in fuel duty. "Buying fuel to get to work or deliver your company's products and services is not a discretionary spend," he said. "To continue to ratchet up fuel duty as if it is a pernicious luxury like alcohol or tobacco is misguided and cynical."

The BVRLA did though welcome the removal of diesel's 3% benefit-in-kind surcharge from April 2016, and the decision to set out BIK rates for the next five years, and said the lowering of BIK tax thresholds was "no surprise".

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