The Miles Consultancy

Welcome to our review of the main measures in this year's Budget affecting fleets.

Main points

• As widely expected, the Chancellor quashed any hope of an immediate cut in fuel duty.
• He also announced higher company car tax charges after 2014. The BIK rates for each CO2 band will increase by 2% annually in April 2015 and 2016, rather than 1% as at present.
• However, there will be some compensation for drivers of diesels, who will no longer pay a 3% BIK supplement from April 2016.
• The Private Fuel Benefit 'multiplier' will go up by 7.4% in April (which is roughly twice the rate of inflation) to £20,200.
• The threshold for claiming higher rate company car capital allowances and the lease rental disallowance, which was set at 160g/km in 2009, will fall to 130g/km in April 2013.

TMC's view

George Osborne's firm stance on fuel duty underlines the Government's belief that businesses should combat rising fuel costs through operational and policy measures.

For example, one of our customers has found that TMC Mileage Audit has increased their recovery of private mileage costs from drivers by 50%. Another customer has seen recovery improve by 85% since they introduced Mileage Audit.

Their combined saving on business mileage costs this year will be nearly £500,000.

The Budget measures

Company car tax

Rates of BIK from 2014 to the end of 2017 were announced in the budget. There will be a one percentage point rise for all cars over 75g/km in April 2013 and 2014. In each of the next two years there will be a further two percentage point rise, meaning that the lowest BIK band in April 2016 (for cars from 0-94g/km) will be 15%.

Zero carbon and ultra-low carbon emission vehicles will lose their exemption from BIK in 2015 and will be taxed at 13%, rising to 15% in 2016.

The 3% BIK supplement for diesels will be scrapped from April 2016 making petrol, diesel, electric and alternative fuel company cars all subject to the same level of tax from 2016-17.

Some security enhancements no longer have to be treated as accessories when calculating company cars' benefit value. This is retrospective from 6 April 2011. Van benefit remains frozen at £3,000 in 2012-13.

Fuel benefit

The fuel benefit charge multiplier will increase by 7.4% from 6 April 2012, to £20,200. This will cost a 40% taxpayer who drives a 140g/km diesel company car £198 more in fuel BIK in 2012-13. In 2013-14, the multiplier will increase by 2% above RPI. Van fuel benefit remains frozen at £550 from 6 April 2012 but will increase by 2% above RPI in April 2013. Future multiplier rates will be announced one year ahead.

Fair Fuel Stabiliser

There will be no return to above-inflation increases in fuel duty unless the price of oil falls below $75 a barrel. Further details of the stabiliser will be announced shortly.

Fuel duty.

Fuel duty will go up by 3.02 pence per litre in August. The Chancellor claimed that the actions he took in previous budgets had saved drivers 6 pence per litre at the pumps since 2010.

Vehicle excise duty

VED rates will increase in line with RPI from 1 April this year apart from VED rates for Heavy Goods Vehicles, which will be frozen until April 13.

However the Government is thinking of shaking up the VED system "to ensure that all motorists continue to make a fair contribution to the sustainability of the public finances." It will also consult motoring groups about allowing vehicle owners to spread the costs of VED payments via monthly direct debits.

The 2013 Finance Bill will extend the grace period for not displaying tax discs sent by post to 14 days, and will lessen administrative burdens on car leasing businesses by extending the date-to-end-month scheme to VED exempt licences.

Capital allowances

The Budget extended the 100% first year allowance (FYA) for businesses purchasing low emissions cars for a further two years to 31 March 2015, although the qualifying threshold will be reduced from 110g/km to 95g/km. Leased business cars will no longer be eligible for the FYA, however. The BVRLA described the decision as discriminatory, adding that it will lobby for leased cars to be included.

From April 2013, the CO2 threshold for the main rate of capital allowances for business cars will reduce from from 160g/km to 130g/km, as will the threshold above which the lease rental restriction applies. Although the average new fleet car's carbon footprint is already closing-in on 130g/km, the BVRLA said that lowering the capital allowances threshold could be 'a step too far too soon'. Fleet registrations might stall if businesses re-evaluate their fleet policies, it cautioned.

More information

If you would like to discuss any of the issues raised in this bulletin or would like more details of TMC's fuel and mileage cost control solutions, please call us on 0843 222 6000 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it '; document.write( '' ); document.write( addy_text94193 ); document.write( '<\/a>' ); //--> This e-mail address is being protected from spambots. You need JavaScript enabled to view it .