Low emission vehicles could help businesses in Surrey and Kent combat Emergency Tax Budget Increase
T W White & Sons' low emission vehicles could help businesses in Surrey and Kent combat Emergency Tax Budget Increase
Businesses in Surrey and Kent that will be hit after the new Government’s emergency Budget revealed a raft of vehicle tax increases, can in fact make savings if they opt for low emission cars that fall outside the hikes.
Industry experts say that organisations should conduct a root and branch review of their existing fleet funding methods - which should also take into account the plethora of cash alternative schemes available and offered to many at-work drivers - to ensure the most cost-effective solutions are being pursued.
Additionally, contract hire and leasing experts, such as British Vehicle Rental and Leasing Association chief executive John Lewis, believe that the impact of some tax rises, for example in capital allowances on cars and vans, will potentially be offset by savings in corporation tax. It has been suggested that coupled with the rise in VAT, the tax measures will make vehicle leasing through Mazda Contract Hire more financially attractive.
Gordon Parker, Mazda Franchise Manager at T W White & Sons anticipates the rush to beat the VAT rise from (17.5% to 20% on January 4, 2011) will result in local businesses bringing forward car buying decisions in order to save between £300 and £400 on the average price of a new car.
The main tax measures announced by the Chancellor were:
• Value Added Tax - the standard rate of Value Added Tax (VAT) will rise to 20% from 17.5% from January 4, 2011.
• Insurance Premium Tax - the Government will increase the standard rate of Insurance Premium Tax (IPT) to 6% from 5% and the higher rate to 20% from 17.5% from January 4, 2011.
• National Insurance - employee and employer National Insurance (NI) rates will increase by 1% from April 6, 2011 as announced in the March Budget by the previous Labour Government. As a result employee rates will increase from 11% to 12% and employer rates from 12.8% to 13.8%. The employers’ rise will also impact on NI paid on benefits-in-kind such as company cars and company-funded fuel used privately.
• Corporation Tax - a reduction in the main rate of corporation tax from 28% to 24% will take place in 1% cuts over the course of four financial years starting on April 1, 2011. The Chancellor also announced a reduction in the small profits rate of corporation tax from 21% to 20% from April 1, 2011.
• Capital allowances - a reduction in the main rate of capital allowances on plant and machinery, which includes vans and cars, from 20% to 18%, and the special rate from 10% to 8% from April 2012. The BVRLA says that the 20% to 18% cut will affect expenditure on cars emitting 160g/km of CO2 or less and all commercial vehicles, while the 10% to 8% cut will affect expenditure on cars emitting more than 161g/km.
• Fuel duty - the Chancellor said there would be no new increases in fuel duties over and above those already announced by the previous administration in the March 2010 Budget. Therefore, there will be a 1p per litre rise in duty on October 1 and a further 0.76p per litre rise on January 1, 2011. The Chancellor also reiterated that fuel duty would increase by 1p per litre above inflation in 2011/12, 2012/13, 2013/14 and 2014/15. The planned fuel price increases coupled with the VAT rise will add about 5p per litre to the price of fuel from January next year.
• Company car tax - the Chancellor said the Government would reform company tax so it continued to provide an incentive to businesses to purchase the lowest CO2 emitting vehicles on the market. As a result, the coalition Government intends to press ahead with the company car benefit-in-kind tax threshold changes that it inherited from the previous administration and implement them in April next year. This means the basic threshold for the 15% band of company car tax will be reduced by 5g/km of CO2, so that the band applies to cars emitting between 121 and 129g/km.
Gordon Parker said, “Cost reduction and carbon emissions cutting go hand-in-hand. So, for fleet operators wanting to keep operating costs under control and company car drivers who want to keep their benefit-in-kind tax bills in check, low emission Mazda vehicles are the optimum choice.
“Fleet decision-makers and drivers who continue to ignore these warnings will not only see their tax bills rise but will also see their fuel bills soar as fuel costs increase. Low emission vehicles deliver first-class MPG, reduced costs and lower tax charges.”
Now on show at T W White & Sons, Mazda’s model range offers numerous models that emit less than 160g/km of CO2. Impressively, the Mazda2 1.4 diesel 68ps and 1.6 diesel 90ps derivatives emit just 107g/km and 112g/km respectively - thus both breaking in to the cut-price 10 per cent (13% for diesel models) company car benefit-in-kind tax band applicable to sub 120g/km models. In addition, the ultra-clean 1.4 diesel also beats the 110g/km threshold for 100 per cent first year capital allowances which applies to the cleanest cars on sale.
Move up to the Mazda3 and 17 of the four-door saloon and five-door hatchback models (with power outputs from 105ps to 185ps) emit less than 160g/km.
Indeed, the 1.6 109ps diesel emits just 119g/km of CO2, while the 2.0 litre Sport thanks to innovative i-stop (Smart Idling Stop System) technology records 159g/km.
Meanwhile, the Mazda6 - the model that put the brand on the company car map – has recently been revised and offers a wide selection of sub-160g/km models led by the 138g/km 129 ps 2.2 diesel hatchback.
Gordon Parker concluded, “We’re going to see local businesses continuing to adopt ‘greener’ fleet policies selecting more and more vehicles that will fall into lower CO2 categories because that is a sure-fire way to cut costs. Mazda’s range of low emission models is continuing to expand and we expect to win more fleet business as a result in 2010.”
To find out how Mazda can cut the cost of corporate motoring, please call twwhiteandsons on 0844 558 1819.