The government is being urged by fleet decision-makers to announce its long-term plans for company car tax beyond 2024/5…
The Need For Company Car Tax Clarity
Fleet decision-makers are urging the government to provide long-term clarity concerning company car tax; otherwise known as Benefit-in-Kind (BiK) tax. A growing number of fleets are becoming increasingly concerned that a substantial hike could be introduced, in an effort to make up for lost revenue. The Association of Fleet Professionals (AFP) wants current BiK rates to be fixed until the end of the decade; as businesses and their employees currently have no way of knowing what rates they’ll be facing in 2025/6.
Paul Hollick, the AFP’s chairman, had hoped for further clarification in the government’s recently published decarbonisation plan. However, he was left “frustrated” by its contents. He said, “we’ve been banging the drum about this for some time, that to make the Government’s 2030 electrification deadline workable, we need to have corresponding benefit-in-kind tables in order to strategise effectively”. He continued, “many fleets, including AFP members, have long-term plans in place predicated on meeting that date but it is clear we need a stable and predictable taxation environment in order to do so”.
Being Realistic
It’s not particularly surprising that the government isn’t being forthcoming about the future of BiK rates. Keeping its cards close to its (figurative) chest grants it manoeuvrability; after all, who’s to know what its balance sheet will look like in 2024 or 2025? That said, the AFP insists that its request for clarity is realistic. For instance, it’s acknowledged that rates will almost certainly rise for EVs. It simply wants any rise to be transparent and properly communicated to industry.
As Hollick explained, “as EVs become the dominant power in company cars, which we expect to happen around the middle of this decade, the Government could reasonably move to reduce the incentives attached to them or look to other sources of taxation in order to maintain revenue. That makes sense but it needs to be done in a planned and responsible manner”.
He added, “this benefits them financially but also helps the Government decarbonise road transport. It is an incentive-and-result approach that is built on trust. What we very much want to avoid is a potential situation where the Treasury of the time suddenly realise that the company car parc is perhaps 60% EV at some point in the mid-late 2020s and push up benefit-in-kind substantially”.
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