I’M really not sure what this government is doing with company cars. So many mixed messages it’s like somone’s put the blender on but forgotten to fasten the lid properly.
Result? A half-mashed mess whizzed out across the kitchen.
But one thing I do know is that Chancellor Hammond made an outrageous tax grab on the company car driver in his Budget.
Gratuitously adding a further percentage point to the company car tax of all diesel drivers from April next year is nothing more than a swashbuckling raid on the pockets of company car drivers.
Perhaps that’s a little vivid for ‘spreadsheet Phil’. A line going nicely into the black might be more in keeping with Mr Hammond.
As our story points out, 800,000 drivers are in line to pay out £70m extra in benefit in kind tax.
That cannot be right.
I asked Kia’s head of fleet John Hargreaves what he thought. He was more sanguine.
“That 1% increase is not in itself a great amount. I don’t think it will deter drivers.”
Well, yes, but when all costs are going up, it’s a cumulative effect. And more to the point, it will impact more because of the ratcheting effect of the company car tax bands in 2018/19.
A £20,500 Kia Sportage’s benefit in kind goes up £608 for example – that’s an additional £122 a year in company car tax for a 20% tax payer. Not a massive amount as John says – £10 a month – but when everything else is going up it hurts.
Put it another way, as Rupert Russell from Comcar has done; “A diesel company car driver with a 110gm CO2 car will now face a 16.7% increase in company car tax in April 2018 instead of the 12.5% increase expected before the latest Budget.”
So I’m not in John’s camp. And neither is Paul Hollick, chairman of the Institute of Car Fleet Management (ICFM).
He reckons that the government is on a mission to drive employees out of company cars.
“The actions that the government is taking shows that it does not understand that the emissions problem – and therefore the whole air quality problem – is with older vehicles. Cars that meet Euro6 emission standards, which is an increasing number of company cars are the ‘cleanest’ available,” says Paul.
“I do not understand the reason why HM Revenue and Customs release company car benefit-in-kind tax tables three years in advance, for the government to change them on a whim. The action the government is taking is outrageous.”
Ummm…I couldn’t agree more. Absolutely. Spot. On.
And, of course, those company car drivers have no escape. Most are on a three or four year car lease cycle, so the opportunity to change vehicles does not exist.
But given Mr Hammond’s sledgehammer approach to company car tax, he’ll be getting less tax from company car drivers because they’ll all be opting out for some kind of cash alternative when that moment arrives.
Really, you can’t blame them.