Story: ROBIN ROBERTS
Budget 2012 – it might seem a distant memory. But the after-effects are going to be very real for both small businesses and their company drivers.
Something noted by the British Vehicle Rental & Leasing Association (BVRLA) which is taking steps to try and address these issues, issues it sees as a tax attack by the government on company cars and SME firms running company cars.
And these company car tax changes are heading the way of every small business.
- “The Government hopes to earn an extra £2bn from company car tax between 2013 and 2017”
The BVRLA has written to HM Treasury to outline its reservations over the business car tax measures outlined by the Chancellor, and has assembled a ‘Business Car Taxation Taskforce’ to develop lobbying strategies and technical arguments against what it sees as discrimination against the company car sector as a whole.
The Budget announced last March introduced a series of changes to the company car tax regime and made it much harder for both SME firms and the leasing companies which the BVRLA represents to claim tax relief (Capital Allowances) on business lease vehicles.
Documents obtained by the BVRLA under the Freedom of Information Act show that the Government hopes to earn an extra £2bn from company car tax between 2013 and 2017 and make nearly one million fewer business cars eligible for 100% first year or standard tax relief during the same period.
The association believes that these changes will place an even more disproportionate tax burden on essential road transport users and remove a vital stimulus for the ultra-low carbon vehicle market.
“Tax incentives for reducing the CO2 emissions of company cars have worked too well and the government is worried about falling revenues,” said BVRLA chief executive John Lewis.
“But these measures are ill-advised, unfair and over aggressive. There is almost total consensus across the road transport and automotive industry that the government is in danger of erecting a massive roadblock across the road to low-carbon motoring”.
The newly-formed taskforce plans to commission an independent report that will use member statistics and other data to challenge unfair elements of the government’s Capital Allowances regime, says the BVRLA.
In particular it wants to reverse the decision to remove the 100% first-year capital allowances available on low-emission vehicles from leased cars, which would also impact rental firms.
The group will also seek to challenge the continuing application of the Lease Rental Restriction, which prevents companies deducting the full cost of business car leases or renting certain cars from their taxable profits.
The BVRLA has already started trying to persuade the government to introduce a more gradual increase in company car tax for people driving cars emitting between 0 and 75g/km CO2 after April 2015.
At the moment, these cars will go from either being taxed at a zero rate of company car tax or 5% of their P11D price to a 13% rate overnight. It is already making company car drivers hold back on choosing an ultra-low emission car while they re-evaluate the impact on their take take-home pay, the BVRLA believes
“We understand the need for austerity measures, but this assault on essential road users will result in more harm to the environment. It is even more misguided than the Pasty Tax,” said Lewis.
See our guide to business car leasing and company car tax allowance if you want to maximise your benefits.
