Fleet representative organisation ACFO is pushing Chancellor Phillip Hammond to publish details of company car benefit-in-kind (BIK) tax rates up to the end of the financial year 2024/25.
According to ACFO, this would provide fleets with the clarity and stability required to enable long-term fleet planning. Currently, BIK rates are only published up to the close of 2020/21.
The organisation will join with other industry bodies including the British Vehicle Rental and Leasing Association (BVRLA) to make a combined representation to the Treasury ahead of the next Budget announcement.
The call comes after a long period of uncertainty around BIK tax, reportedly causing fleets to put vehicle replacement on pause and employees to opt out of their company car schemes.
AFCO chairman, John Pryor, said: “This year the company car, a long-time favourite employee benefit, has come under increasing pressure due to the government refusing to commit to announcing benefit-in-kind tax rates long-term and tinkering with long-established rules.
“As a result, ACFO wants the Chancellor in his forthcoming statement to provide long-term tax stability and clarity to enable fleet decision makers to compile company car choice lists in the knowledge that they will not be usurped by tax changes.
“Additionally, if the government is to achieve its environmental objectives, it is critical that company cars have a future.
“The year-on-year increase in the tax burden is likely to drive more employees to give up company cars, which historically have always been among the most environmentally-friendly as they feature the very latest cutting-edge technology.
“If a combination of the rising tax burden and long-term tax uncertainty continues then it will drive more employees out of company cars.
“What’s more, the government’s hoped for significant take-up of plug-in models, which is being led by fleets, will not be achieved, and overall CO2 emissions are likely to rise as we know that staff giving up a company car typically opt for one with higher emissions when making a personal acquisition decision.”
As part of its 2018 Budget wish list, the organisation is also hoping the Chancellor will:
• Reverse the decision to increase BIK tax on cars with emissions of below 50g/km to 16% in 2019/20
• Bring announced reduced rates ( for 100% electric models and electric mileage ranges up to 130 miles) into effect from April 2020/21
• Pledge to keep plug-in car and van grants in place for the long term to reduce uncertainty for fleet manager and motorists