The Chancellor has signified that he wants business motoring to have a reduced environmental impact.
The broad thrust was to impact on business car costs for those vehicles with higher emissions; and reduce business car costs for those with lower emissions. The key points to consider are these:
Vehicle Excise Duty (for cars registered from March 2001)
- Raised VED for band G cars (226g/km CO2) to £300 in 2007-08; and £400 in 2008-09. Change from 22 March 2007
- Cars in band A (below 100g/km CO2) continue to attract no VED
- Cars in band B (101g/km to 120g/km) receive VED reduction: petrol/diesels pay £35; alternative fuel £15
- Cars in bands C-F: harmonisation of petrol/diesel VED prices
Approved Mileage Allowance Payments (AMAPs)
- Decision deferred. But likely outcome is change to current 40p / 25p rates and the mileages at which they can be claimed. This is important: many small businesses use AMAPs to claim for business mileage undertaken in their private cars.
Fuel duty rates
- Increased by 2p per litre from 01 October 2007
- Further increases of 2ppl in 2008-09; and 1.84ppl in 2009-10
- Current 20ppl biofuel differential extended to 2009-10
Company Car and Fuel Benefit Tax
- Company car 15% threshold remains at 135g/km for 2009-10
- Company cars capable of running on E85 biofuel will receive a 2% discount – from 06 April 2008
- The Company Car Fuel Benefit Charge multiplier will remain frozen at £14,400 for 2007-08
Capital Allowances
No final decision but government wants to push businesses towards more environmentally-friendly travel. Its preferred option is three-tier, with higher polluting cars disadvantaged. Note: the government’s stance is that a higher polluting car has emissions over 165g/km (VED band E and above).
- Retain 100% first year writing down allowance for cars with emissions up to 120g/km CO2
- Use general plant and machinery capital allowances pool for cars with emissions between 121g/km and 165g/km
- Introduce new pool with lower writing down allowance for cars with emissions above 165g/km