| By :
Jackie De Burca
With the budget fleet managers will be assessing the impact on their running costs and with some of the changes the impact could be as significant almost as car fleet insurance costs. The budget will see the most significant changes to vehicle tax since the CO2-based tax system was introduced in 2002. Penalties to higher CO2 cars will have a big impact. Also fleets will face a tightening of (BIK) benefit-in-kind tax bands, as well as new VED levels, BIK tax-free electric vehicles. CO2 cars high penalisation: High-CO2 cars will be looking at first-year charges of over double their annual road tax thereafter. This is an important factor that will add to the overall costs of running many vehicles with the highest rate for cars with CO2 emissions of 256g/km or more is £950. This showroom tax is a first-year equivalent of vehicle excise duty which is there to encourage buyers to choose lower-emission models and discourage them to opt for higher levels of CO2. However taking the Land Rover Freelander as an example of some of the cars which you may not consider would face high first year rates. Although it is now fitted with stop/start technology for manual versions, however this system is not yet fitted automatic transmission cars. So taking the model Freelander 2.2 TD4 automatic which has CO2 emissions of 214g/km it looks to face a first-year rate of £550 with the calculations after the first year coming in at £245 tax. Budget Generosity Towards Electric vehicles? Can we consider that the budget is being generous when it comes to electric vehicles, especially given that for the moment they remain a niche market? When they are being used more and no longer represent a niche market the budget could be considered more generous. Regarding electric vehicles anyone who is driving an electric car or van will get a BIK tax payment holiday for 5 years. Petrol and diesel cars Watch out for this one fleet operators as this budget sees petrol cars with CO2 emissions at 230g/km or higher and diesel cars with CO2 emissions of 215g/km or more will now incur tax at the highest 35% rate. These changes have massive implications for fleets and drivers who have not made plans far enough ahead. The lower benchmark in the main bands for BIK tax falls by 5g/km to 130g/km, although vehicles with CO2 emissions up to 120g/km still gain an advantage of at least five percent points from April. Changes to vehicle excise duty-An Opportunity? The budget changes to vehicle excise duty could offer an opportunity to fleet management. In order to reduce costs fleet managers could switch to a model in the same class but with lower CO2 emissions. There is an increasing list of cars which are eligible to remain free of tax, which have CO2 emissions up to 100g/km; however the current question mark on this is whether the technology costs to reach such low emissions may work out more expensive in the long term. Some experts feel that elements of the budget regarding fleets lack substance.
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