Company Car Tax and Legislation
The Government announced a raft of tax and spending proposals in Budget 2021, but announcements for the fleet and leasing industry within on the ground.
As announced at Budget 2020, it was confirmed that the company car tax rates already announced for 2022 / 23 will remain frozen until 2024 / 25.
Company Car fuel benefit
From 6 April 2022, the company car fuel benefit multiplier will increase in line with the Consumer Prices Index (CPI) rate of inflation from £24,600 to £25,300.
Company Van tax
From 6 April 2022, the van benefit charge and van fuel benefit charges will both increase in line with CPI.
The van benefit charge will increase from £3,500 to £3,600 and the van fuel benefit charge will increase from £669 to £688.
Meanwhile, Alphabet’s principal consultant, David Bushnell, commented on what the rise in corporation tax means to the fleet industry as he warned about the implications for affected businesses running company vehicles above 50g/km.
“Businesses need to assess their fleet strategies and place greater emphasis on the whole life cost of the vehicles they operate. This will be crucial creating cost savings for businesses, and electric and plug-in hybrid vehicles will play a central role in this.”
“These vehicles should no longer be considered alternative fuels, but instead should form a natural part of the next cycle of vehicles for company car drivers. This will not only result in cost savings for companies and drivers alike, but would also keep them one step ahead of the national time frame for electrification.”
David Brennan, CEO of Nexu Vehicle Rental, was pleased to see the Government axed the planned rise in fuel duty.
“With fuel prices currently at the highest level in eight years, the cancellation of the planned rise in fuel duty should be celebrated. This will not only have a positive impact on individuals and families, but it will also benefit businesses operating large fleets - enable them to save an estimated £30 per van for an average tank of fuel and over £120 for HGVs.”
“Whilst the Government continues to signpost fleet's towards a green future with mention of its net- zero commitments, it was disappointing to not hear of any increased support for the production of electric vehicles.”
“Once again, enhanced financial support is still needed from the government to increase affordability of the vehicles and ensure there is support infrastructure in place for business that decide to make this important transition."
No further Benefit-in-Kind rates announced
There was also no further announcement on company car Benefits-in-Kind (BIK) rates; the current tables only go to 2024 / 25 and the Association of Fleet Professionals (AFP) has said in recent weeks that further clarity was needed.
Speaking in February 2021, AFP Chair Paul Hollick had said having BIK tables through to 2029 / 30 would “mean that we can produce comprehensive EV adoption strategies that take us right through to the moment when petrol and diesel cars were no longer be available, tackling financial and operational concerns.”
However, following the Budget, Hollick said that the Budget had been much-more important for its broad macroeconomic sweep than for any detail issues. “Yes, we’d like to see indications Of more work happening at the Treasury in areas such as the future of benefit-in-kind taxation for company cars and vans, as well as wider transport issues such as road charging, but the crucial thing for the moment is that this is continued to be fully supported through the tough economic issues we're all facing,” he commented.
No news on road user charging
No announcement on work to explore road user charging was forthcoming, despite ongoing reports that this is on the Government’s agenda to avert a £40 bn tax shortfall from the switch to electric vehicles.
The Vehicle Remarketing Association had said putting the issue on the agenda now would give businesses time to prepare.
LeasePlan Expressed disappointment that no announcement was made. “Reviews Had previously been established to look into how road taxes could better encourage the uptake of lower - emission vans and cars, but the final policies haven't been announced yet. With the 2030 Ban on new petrol and diesel sales fast approaching, we need these sorts of policies in place as soon as possible,” said Matthew Walters, head of consultancy services and customer value at LeasePlan UK.