Spring Statement Fails to Clarify Future Company Car Tax

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The fleet industry has expressed "disappointment" at the failure of Chancellor of the Exchequer Philip Hammond to clarify company car benefit-in-kind tax rates for the next five years.

Fleet managers and company car drivers had been hoping that last week’s Spring Statement from the Chancellor would provide clarity on future tax rates from April 2020, which will be based on cars carbon dioxide (CO2) emission figures obtained under WLTP, which was introduced last year.

The Chancellor merely stated that "in the coming months” the Government would publish its response to its recent call for evidence in relation to its review into the impact of WLTP on company car tax benefit-in-kind tax as well as Vehicle Excise Duty.

The lack of clarity means that fleets and company car drivers continue to have no idea as to what company car benefit-in-kind tax rates will be from 2021/22 as rates have only been published up to and including 2020/21, or if those already announced for 2020/21 will change.

Paul Hollick, chairman of fleet decision-maker training organisation ICFM, of which Martin Evans, Jaama’s managing director is a board member, said: "On behalf of all fleet decision-makers and company car drivers, the ICFM is hugely disappointed that the Chancellor did not use the Spring Statement to bring clarity to company car benefit-in-kind tax from April 2020 and beyond.

"Promising to publish details 'in the coming months' on what is a fundamental issue for all fleets merely continues the uncertainty that is crippling decision-making.

"Government in-decision is delaying the acquisition by fleets of new cars featuring the very latest emission-busting engine technology and, in some cases, driving employees out of company cars and into privately-funded older and more polluting vehicles."

Making Tax Digital Arrives 1 April 2019

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Making Tax Digital (MTD) is fast approaching, so what is it and who will it affect?

What is Making Tax Digital?

From 1 April 2019 VAT registered businesses with a taxable turnover above the VAT registration threshold (£85,000) will need to keep digital VAT records and submit their VAT return to HMRC using MTD compatible software. This is mandatory for VAT return periods that start on or after 1 April 2019.

Why is it changing?

The UK government want to make it easier for businesses to get their tax right and keep on top of their affairs by introduction of a new initiative, Making Tax Digital for Business (MTDfB).

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world and MTD is making fundamental changes to the way the tax system works – transforming tax administration so that it is:

• More effective
• More efficient
• Easier for tax payers to get it right

This streamlined digital experience will integrate tax into day-to-day business record-keeping in a way that gives businesses confidence that they have got it right and provides them with a view of their tax position in-year.

It is anticipated that the move to digital integration will eliminate many of the existing paper-based processes, allowing businesses and their agents to devote more time and attention to maximising business opportunities, encouraging growth and fostering good financial planning.

Investment in Fleet Software Drives Efficiency Improvements

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Ongoing fleet industry change is presenting unprecedented challenges for fleet decision-makers and that brings both complexity and opportunities.

Fleet decisions makers need a helicopter view of what is going on in their fleet to make informed decisions. Having good systems and processes in place that effectively collect and analyse data is essential for fleets to have a 20:20 fleet view. The ever-pressing need for companies to effectively manage costs, ensure operational legislative compliance and deliver a competitive edge is a big driver for companies to embrace technology.

After people, fleet is typically the second biggest expenditure item for most companies, so it makes absolute sense that robust data analysis is critical to make informed strategic decisions.

Therefore, absolute visibility of data is essential when making such 'big' decisions, as it is in respect of compliance - whether relating to vehicles or drivers. For example, policing pre-journey vehicle defect checks is particularly important for commercial vehicles.

Ensuring that both a driver and vehicle risk management audit trail is easily accessible is a pre-requisite of fleet management best practice. In the case of drivers for example, fleets need to understand factors that include licence validation including ongoing checks, motoring-related fines and crashes and, in the case of vehicles, a comprehensive service, maintenance and repair record including pre-use vehicle checks.