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ACFO calls for budget clarity on company car tax

Date: 03 October 2018   |   Author: Sean Keywood

Fleets must be told what company car BIK rates will be until the end of the 2024/25 financial year in the government's upcoming budget, according to ACFO.

The fleet operator organisation also says long-term fleet planning should not be undermined by change being introduced during that period.

ACFO has revealed its wish list ahead of the budget, which is expected to take place on 29 October.

It says that although BIK rates have been announced to the end of 2020/21, the introduction of the WLTP vehicle testing regime may see rates realigned from April 2020.

With four years being the typical company car replacement cycle, ACFO says it makes sense to have at least four years notice about BIK rate updates.

It has also warned against unexpected changes such as the increase in the diesel car surcharge from 3% to 4% in 2017 - and wants to see that surcharge reconsidered due to the introduction of cleaner Euro 6 diesels. 

ACFO also wants consultation with it and other fleet industry organisations before any changes are announced, and has reiterated calls for an Advisory Electric Rate to be introduced for plug-in hybrid and range extender electric vehicles. 

It has also called on the government to bring forward reduced BIK rates for electric cars, currently due to roll out in 2020, and commit long-term to plug in car and van grants. 

ACFO chairman John Pryor said: "This year the company car, a long-time favourite employee benefit, has come under increasing pressure due to the government refusing to commit to announcing benefit-in-kind tax rates long-term and tinkering with long-established rules.

"As a result, ACFO wants the chancellor in his forthcoming statement to provide long-term tax stability and clarity to enable fleet decision makers to compile company car choice lists in the knowledge that they will not be usurped by tax changes."

Pryor added that protecting the future of company cars was crucial if the government wanted to achieve its environmental objectives.

He said: "The year-on-year increase in the tax burden is likely to drive more employees to give up company cars, which historically have always been among the most environmentally-friendly because they feature the very latest cutting-edge technology.

"If a combination of the rising tax burden and long-term tax uncertainty continues, then it will drive more employees out of company cars.

"What's more, the government's hoped for significant take-up of plug-in models, which is being led by fleets, will not be achieved, and overall CO2 emissions are likely to rise - we know that staff giving up a company car typically opt for one with higher emissions when making a personal acquisition decision."