Mar 25, 2008
Hilton Motor Group - Budget 2008 Tax Guide
Chancellor Alistair Darling delivered this year’s Budget speech on 12 March.
We have analysed and summarised the implications of this year’s announcement for fleets and company car drivers.
Mar 02, 2008
Hilton Smart Repairs Website goes live
The first stage of the new Hilton Smart Repairs Website is now live ......
Hilton Motor Group - Budget 2008 Tax Guide
hilton
V E H I C L E L E A S I N G
0 1 2 7 9 7 5 7 0 6 0
Chancellor Alistair Darling delivered this year’s Budget speech on 12 March.
We have analysed and summarised the implications of this year’s announcement for fleets and company car drivers.
Vehicle Excise Duty A new first year charge to be introduced for new registrations from April 2010.
The charge increases more steeply for vehicles with CO2 emissions above 160g/km, up to £950 for the highest group.
Second and subsequent years revert to standard VED charge.
Hilton Opinion: The first year charge had been muted and reflects the Government’s intention to influence vehicle choice in relation to higher CO2 emitting cars. More fleet administration is a possibility & a rush to register higher emitting cars before April 2010.
Capital Allowances (Business Cars)
Writing down allowances (WDAs) to be based on emissions from April 2009.
Cars with CO2 emissions above 160g/km will attract 10% WDA, whilst cars with emissions of 160g/km and below will attract 20% WDA.
This effectively creates two “pools” for tax purposes and replaces the current approach of individual tax calculations for expensive cars of £12,000 or more.
The new rules apply to new cars from April 2009.
Hilton Opinion: The impact for cars costing over £12,000 is to delay the recovery of capital allowances, due to the “pooled” approach, which will lead to a tax timing disadvantage for organisations claiming capital allowances.
Expensive Car Leasing Disallowance
The current disallowance for leased cars costing over £12,000 will be replaced by a disallowance based on CO2.
From April 2009, cars with CO2 emissions above 160g/km will attract a 15% net disallowance relating to finance payments.
For cars with emissions of 160g/km or below there will be no disallowance.
Hilton Opinion: This shifts the emphasis on penalising high CO2 emitting vehicles rather than expensive cars.
Funding decisions for expensive cars with low CO2 emissions may need to be reviewed in the light of this change – this could result in contract hire becoming more attractive for expensive cars with low emissions.
AMAP Rates
The Chancellor confirmed that there will be no changes to the current AMAP rates at 40 pence per mile and 25 pence per mile after 10,000 miles.
Hilton Opinion: The announcement of a new system was widely expected and still leaves a question mark over a future overhaul of the system.
Employee Car Ownership (ECO) and cash for car schemes appear to live on for now.
Company Car Tax
In line with previous Budgets, the Chancellor provided advance notice of the base band for company car for tax year 2010/11 at 130g/km. This is 5g/km lower than for tax year 2009/10 effectively increasing company car tax at most bands by 1%.
Hilton Opinion: This increase was widely expected.
Fuel Duty
Budget 2007 announced fuel duty rates for the next three years, and in line with this policy the rates for 2010 were announced in this Budget.
Standard Road Fuels:
The Chancellor responded to economic pressure and postponed the 2 pence per litre fuel duty increase from 1st April 2008 to 1st October 2008.
Subsequent increases were announced with a 1.84 pence per litre increase due on 1st April 2009 and an increase of 0.5 pence per litre above indexation on 1st April 2010.
Hilton Opinion: This postponement was widely expected.
Alternative Fuels:
The duty differentials given to biofuels will be abolished in 2010/11. The intention is that the Renewable Transport Fuels Obligation will support biofuels.
Hilton Opinion: The RTFO is targeted at ensuring that biofuels remain cost effective whilst ensuring the fuels are ethically produced and in an environmentally sensitive way, although there is no detail as to how this will happen or what the effect will be at the pumps.
Duty rates discounts for Compressed Natural Gas (CNG) will remain, whilst for Liquid Petroleum Gas (LPG) the discount is to be eroded by 1%, both taking effect from 1st October 2008.
Hilton Opinion: This rate reduction will have very little effect as LPG vehicles are a very small niche market and in decline.
Road Charging Schemes
The Government announced an invitation to tender for private sector companies to run a number of projects based on road charging by: time of day, distance travelled, and route chosen. Significant funds are being made available.
Hilton Opinion: This shows yet another turnaround regarding national road charging, which could have a dramatic effect on the fleet market regarding private mileage reclaim systems where vehicle costs change based on the location, time of day, and miles driven. Van Fuel Benefit No detail was provided but a statement has been made that the van fuel benefit will “mirror” that of company cars.