The Budget
New Advisory Fuel Rates Take Effect Today
Her Majesty's Revenue and Customs (HMRC) has announced new advisory fuel rates for drivers claiming reimbursement for fuel expenses incurred while driving on business. The rates are applicable to journeys undertaken on or after 1 June 2010. Employers are not obliged to reimburse their employees at these rates, which indicate the maximum tax-free level.
Engine Petrol * Diesel *
1,400cc or less
12p (11p)
11p (11p)
1,401cc to 2,000cc
15p (14p)
11p (11p)
over 2,000cc
21p (20p)
16p (14p)
*previous figures in brackets
After a few years where the Budget statements didn’t contain much of particular interest to fleet decisionmakers,
Leasing of Business Cars - What is happening?
Cars with a CO2 emissions of 160g/km or less will face no lease rental restriction, meaning that the cost of the lease is100% deductable against taxable corporate profits.
Companies leasing cars with CO2 emissions of above 161g/kg or more will face a 15% lease rental restriction, meaning that they can only deduct 85% of any payment rental against their taxable profits.
What happens to cars treated under the current regime?
The existing "expensive cars" regime for vehicles costing over £12000 (with an annual writing down cap of £3000 and a balance adjustment on disposal) will remain in place for five years. Any balance of unrelieved expenditure left after the five years will be added to the general pool of unrelieved expenditure.
Will short term hire (Daily Rental Cars) be affected?
Yes, daily rental cars will be brought in to the new regime. A daily rental company using leasing to fund cars emitting more than 160g/km will from 1st April 2009 be deemed as the last business in a chain of leases and it will incur a 15% lease rental restriction.
What does expenditure mean?
Expenditure is incurred as soon as there is an "unconditional obligation" to pay for an asset, providing the expenditure is due to be paid within four months. For example, if a contract to purchase cars is entered into on 31st March 2009 and requires a payment to be made on 31st July 2009, the payment obligation is treated as arising on 31st March 2009.
Vehicle Excise Duty (VED)
The Chancellor changed the Vehicle Excise Duty banding, the main elements of which were introducing a new top band for high emission vehicles and removing all VED on the lowest-emission cars.
What does this mean for you?
VED on company cars is usually paid by employers, so this is yet another reason to ensure drivers choose the greenest vehicles.
If you’d like to know more about the changes announced in the Budget, please get in touch.
| < Prev | Next > |
|---|