TaxPersonal TaxTax changes to transform car fleets

Tax changes to transform car fleets

Nearly half of companies with car fleets will change the structure of their motor pools as a result of proposed tax changes in the coming year, according to a new survey.

And one in five companies will reduce the size of their fleets, a survey by the Institute of Directors and mid-tier firm HLB Kidsons has said. The rule changes are designed to lower CO2 emissions and fleet managers reckon the moves will transform the composition of their fleets.

Richard Baron, deputy head of the Policy Unit at the Institute of Directors said: ‘The survey has highlighted that the government’s policies seem to be working, especially among larger companies, with a swing away from company cars and changes in fleet compositions.

‘The government’s aim was to discourage the use of perk and unnecessarily large cars, but it should take note of the fact that 70% of company cars are considered to be necessary for business use, and not just perks,’ he added.

Last week accountancy recruitment agency Alexander Lloyd predicted that employees would choose to take a cash allowance rather than a company car with too many confusions surrounding the new laws.

From next April, company car tax will be based on a percentage of a car’s list price determined by the level of its carbon dioxide emissions.

The tax levy rises from 15% of the list price in 1% steps for every 5g/km of CO2 emitted up to a maximum of 35%. This means an average 18,000+ mileage car used for business purposes could attract a 24% tax rate compared with 15% at present. Diesel cars pay a further 3% due to the higher levels of pollutants in the fuel.

Links

Staff to take cash rather than car

Company car tax system faces chaos

CO2 tax to change company fleets

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