Arval’s Mike Waters explains some of the tax changes to fuel in the Budget. The Chancellor’s announcement that the intended fuel duty rise of 2p per litre will be postponed until October is welcome.
Drivers have seen fuel prices increase 19% in the last 12 months with a particularly rapid increase in forecourt prices in the last four to five months. To have increased duty at this time would have been unpopular with businesses already operating in difficult market conditions.
While the duty freeze will grab the headlines, businesses must not be lulled into a false sense of security.
The postponement will only give six months’ respite and the Budget also announced a planned increase of 1.84 pence per litre on 1 April 2009, with a further rise of 0.5 pence per litre above indexation on 01 April 2010.
In the face of anticipated price rises, this underlines the importance of businesses remaining vigilant with regard to fuel and adopting robust fuel management policies to control their fuel costs.
VAT fuel scale charges
From 01 May, 2008, the VAT fuel scale charges will be increased to reflect fuel price inflation. In addition, the table of emission bands will be amended to maintain alignment with those used for direct tax purposes. Businesses must use the new scale charges from the start of their next prescribed accounting period beginning on or after 01 May.
