Councils spend £275m a year on grey fleet

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UK councils are spending more than a quarter of a billion pounds a year keeping hundreds of thousands of grey fleet drivers on the road.

Local authorities in England foot three-quarters (76.3%) of the annual bill, reimbursing £209 million to more than 267,000 employees who drive their own car in the course of their work.


Planned fuel duty rise cancelled

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In the 2015 Budget the Chancellor confirmed that September’s planned 0.54p per litre + VAT rise in fuel duty was cancelled. It means that there will have been no rise in fuel duty for five years.

Other Budget announcements impacting on the fleet market included:

• A rate of inflation increase for Vehicle Excise Duty from April 1, but the majority of charges have been held at their 2014/15 levels, notably for lower emission vehicles.

• The fuel benefit charge multiplier for company cars will increase from £21,700 in 2014-15 to £22,100 in 2015/16.

• The van benefit-in-kind tax charge will increase from £3,090 in 2014/15 to £3,150 in 2015/16. The Government has confirmed the end of the benefit-in-kind tax exemption status of electric vans from 2015/16, and that full van benefit charge will not apply until 2020/21. The charge will be phased in - 20% of the rate paid by conventionally fuelled vans in 2015/16, followed by 40% in 2016/17, 60% in 2017/18, 80% in 2018/19 and 90% in 2019/20, with the rates equalised in 2020-21 when there will be a single benefit charge applying to all vans.

• From April 6, 2015 the van fuel benefit charge multiplier will increase from £581 to £594.

• The Government will, once the Severn River Crossings are in public ownership post-2018, abolish VAT and reduce tolls by the equivalent amount and, abolish Category 2 (small goods vehicles and small buses) and include those vehicles in Category 1 (motor cars and motor caravans), therefore reducing the toll paid by small goods vehicles and small buses. Current toll fees are: Category 1 (cars and motor caravans) £6.50, Category 2 (small goods vehicles and small buses) £13.10, Category 3 (HGVs and buses) £19.60. The Chancellor’s announcement will mean cars, motor caravans, small goods vehicles and caravans will pay £5.40 based on current charges and HGVs and buses £16.30.

BIK tax rates to rise

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Company car benefit-in-kind tax rates will increase by three percentage points in 2019/20, it was confirmed in this week’s Budget.

Rates up to the end of 2018/19 were announced in last year’s Budget and company car benefit-in-kind tax tables published by HM Revenue and Customs reveal that in 2019/20 a car with CO2 emissions of 0-50 g/km will be subject to a rate of 16% of the P11D value of the vehicle; rising to 19% at 51-75 g/km and 22% at 76-94 g/km up to a maximum of 37% at 165 g/km and above.

However, in a move to encourage a new generation of low emission vehicles, the Government decided to increase tax rates on the two lowest thresholds - 0-50 g/km and 51-75 g/km by less than was previously planned.

In Budget 2014, the Government announced that in 2019/20 there would be a two percentage point differential between the 0-50 g/km and 51-75 g/km and the 51-75 g/km and 76-94 g/km bands.

That would have resulted in the 0-50 g/km band increasing by five percentage points in 2019/20 to 18% and the 51-75 g/km band increasing by four percentage points to 20%. The impact of increasing the two band rates more slowly - by three percentage points - than previously announced led Chancellor of the Exchequer George Osborne to proclaim that the government was encouraging demand.

However, many fleet industry bosses suggested that the steep tax rises would put the brakes on demand for electric and plug-in hybrid vehicles.

ACFO chairman John Pryor said: “Given the government’s focus on encouraging demand for electric and plug-in cars through a range of incentives, notably grants, ACFO would have expected the Chancellor to reduce company car benefit-in-kind tax rates, not increase them, on these vehicles.”