Posted On : 8th Mar, 2017
Air quality and diesel vehicles
“Fleets can expect diesel vehicle tax changes – and potentially increases – in the future as the government continues to develop its strategy to improve air quality.
“Hidden in the small print of the Budget papers was a pledge by the government “to explore the appropriate tax treatment for diesel vehicles, and [to] engage with stakeholders ahead of making any tax changes at Autumn Budget 2017”.
“The writing is on the wall for fleet reliance on diesel vehicles – and diesel company cars specifically. Since the introduction of CO2-based company car benefit-in-kind tax in 2002, fleets have been reliant on diesel vehicles being the bedrock of fleet operations.
“With the government’s focus on improving air quality, the introduction of Clean Air Zones and cities globally introducing diesel car bans, it is clear that fleets must reduce their dependence on diesel power and develop a strategy that focuses on plug-in vehicles and ultra-low emission vehicles. A failure to do so will almost inevitably trigger an increase in the whole life cost of operating diesel models.
“Clearly we will have to wait until the Autumn Budget for some clarity, but forward-thinking fleet operators should start to review current policies and plan for a future that is less reliant on diesel.”
“New rules governing car salary sacrifice schemes and cash or car allowances come into effect on April 6, 2017, but the Budget failed to provide clarity on the specifics.
“ICFM research among fleet decision-makers has highlighted car salary sacrifice and company car tax along with cash or car allowance issues as the biggest challenge this year and following.
“On December 5 last year, the government published a policy paper ‘Income Tax: Limitation on Salary Sacrifice’ that outlined the changes. However, there have been subsequent meetings with tax experts and industry bodies to discuss the impact of the proposals.
“It was expected that final clarification on the changes would be published with the Budget papers.
“Fleet decision-makers need clarity and with the changes due to come into effect in less than a month, companies need that information quickly to avoid making rash decisions based on a lack of information. ICFM now understands that a further document will be published by HM Treasury on or around March 20.”