Fleet cars hit by Budget

Entrepreneurs will have to redo their own sums following Gordon Brown's complex announcements

Entrepreneurs who run fleets of cars will have to start recalculating their own budgets following Mr Brown’s announcements last week.

The government has brought forward a number of announcements in the name of the environment which will hit car users.

Excise duty has risen by £100 for very high emission vehicles and is now set at £400.

It is also expected that there will be a change to the basis of taxation on the capital cost of company cars.

Emissions are now being cited by the government as the way to measure tax rates and that and other changes are set to come into force in April 2008.

Mileage reimbursement rates are also likely to change at the same time in order to encourage drivers back into company cars.

Alison Chapman, a tax partner at Deloitte, said: “This will further discourage companies from having high emission cars on their fleet.

“As a result companies will have to reconsider some of the cars that they allow their employees to drive, as the increased cost of higher CO2 emission cars hits home, and the many ‘user-chooser’ fleets in this country will start being more selective.

“Smart companies will start to bring tax into their calculations of the whole life cost of the cars on their fleets.”

© Crimson Business Ltd. 2007

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