ACFO is clear on what the Chancellor Philip Hammond must announce in his Budget on Monday, October 29, 2018: long term stability on company car tax.
The fleet decision-makers’ organisation has been lobbying with HMRC, HM Treasury and Department for Transport officials.
It says uncertainty beyond the 2020/21 benefit-in-kind tables is causing fleets to stall on car replacement cycles. Or many are considering opting out of the company car.
Further instability has been caused following the introduction WLTP for homologating vehicle emission and MPG data: uncertainty remains about how the government may realign rates from April 2020 as a result.
ACFO says a four-year notice period should apply to benefit-in-kind tax rates. This fits a typical fleet replacement cycle and would enable organisations and company car drivers to make decisions based on known tax over a model’s lifecycle.
Also reconsider 4% diesel supplement
ACFO also said it wanted to see the 4% diesel supplement reconsidered. ACFO says the latest generation of Euro 6 diesel cars are among the ‘cleanest’ on the roads and the correct choice for high mileage drivers.
Advisory Electricity Rate for PHEVs
ACFO is also continuing to call for an Advisory Electricity Rate for all PHEV plug-in hybrid cars to be introduced. It was delighted that its petition plea for an e-rate for 100% electric cars was answered this year by HMRC, but disappointed that there was no equivalent figure for plug-in hybrid petrol and diesel cars and range extended electric vehicles.
ACFO’s 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.
“Additionally, if the government is to achieve its environmental objectives, it is critical that company cars have a future. 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 as 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 as we know that staff giving up a company car typically opt for one with higher emissions when making a personal acquisition decision.”