We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive all cookies on the Business Car website. However, if you would like to, you can change your cookies at any time
The start point for the best source of fleet information |
Business car drivers have been hit with a £720m increase in their contribution to the Treasury as a result of last week's 2014 Budget.
Chancellor George Osborne announced that the annual two percentage point increase in company car benefit-in-kind bands that kicks in 12 months from now will continue into the 2017 and 2018 tax years, putting a car between 76-94g/km into the 19% BIK band by April 2018.
According to the Budget documentation, the increased company car tax will add £240m to
the Treasury income in 2017/18 and
a further £480m the following year.
The news was worse for low-emission vehicles, with the continuation of a graduated BIK increase putting vehicles under 51g/km of CO2 emissions into the 13% band by 2018, compared with the zero rate at present, while 51-75g/km vehicles rise to 16% by 2018.
Although company car tax bands for April 2019 haven't been set, the chancellor confirmed that the gaps between ultra low-emission vehicles and the 75-94g/km banding will be narrowed again.
The effective disincentive for low-emission vehicles came despite the chancellor declaring in his speech to the House of Commons that the Government is "increasing the discount for ultra low-emission vehicles".
Speaking to BusinessCar, Damian James, chairman of car fleet operators' association ACFO, said: "The positive is that we have extended knowledge of company car tax bands, and people will get into these vehicles with the knowledge of what they will pay.
"In terms of the BIK increases, it's not great, and on low-emission vehicles in particular they are massive increases."
Fellow ACFO director Julie Jenner predicted that a change in tax regime could be on the way by the end of the decade: "They were never going to do anything this year to rock the boat with the general election coming, but this company car tax system has been in place for 12 years now, and with all the talk about NOx and high European emissions targets, I reckon they'll announce that in two or three years it's time to make a change," she said.
Jenner was also scathing of the lack of activity on promoting ultra low-emission vehicles: "It smacks of hypocrisy because the Government wants people in low-emissions vehicles, but that's not bringing in enough revenue. Do they want green or revenue?
"If you can't get people in these vehicles at the moment, what will it take? There needed to be a real incentive to get things going and they haven't listened to all the calls."
The BRVLA echoed the reactions about a lack of green incentives.
"A driver thinking of choosing an expensive zero-emission vehicle will see their company car tax rate rise from nothing to 13% within four years," said chief executive Gerry Keaney.
"Their cost of motoring will rise much faster than someone choosing a gas guzzler."
BusinessCar magazine ©2019
Business Car Magazine © 2020 | Business Car is part of NS Media Group.
