Pre Budget Report 9th December 2009

CHANGES TO MOTORING TAXATION

Company Car and Van Tax (Benefit in Kind)

To help stimulate the take up of electric cars and vans the benefit-in-kind charge for private use of company-provided vehicles will change as follows from 6 April 2010 to 5 April 2015:

• Electric cars -company car tax (CCT) will be reduced from 9% to 0%
• Electric vans - company van tax (CVT) will be reduced from £3000 to £0 (nil rate)
• Class1A National Insurance Contributions charge on employers for electric car and vans will be nil.

From April 2012 the CO2 thresholds for company car tax (CCT) will be shifted down by 5g CO2 per km and the graduated table for of CCT bands will be extended downwards to a new 10% bands for cars emitting 99g/km CO2.

DYNAMIC VEHICLE SOLUTIONS comment: We are pleased to see that the Chancellor has modernised the company car and van tax regime to Stimulate the take-up of electric vehicles. We are disappointed that the Chancellor has once again failed to remove the unjustified and discriminatory 3% supplement on diesel company cars.

Fuel benefit charge

To encourage fuel-efficient travel the fuel benefit-in-kind charge from 6 April 2010 will change as follows:

• the multiplier for cars will increase from £16,900 to £18,000
• the van fuel benefit charge increases from £500 to £550.

DYNAMIC VEHICLE SOLUTIONS comment: The Chancellor has opted to unfairly increase taxes on the employees provided with fuel for private use.

Approved Mileage Allowance Payments

Remains unchanged at 40p for the first 10,000 miles and 25p thereafter.

DYNAMIC VEHICLE SOLUTIONS comment: The Chancellor today announced a range of measures to encourage greener business motoring. However, by maintaining the AMAP payment at its current over-generous rate he is doing nothing to incentivise the 4 million claimants to drive fewer miles. These drivers are typically using cars that are older, more polluting and less safe than the modern vehicles supplied by lease and rental fleets.

First year allowances

From 6 April 2010, businesses will be able to claim 100% first-year allowance (FYA) for the purchase of electric vans.

DYNAMIC VEHICLE SOLUTIONS comment: We are awaiting confirmation from HMRC that the 100% FYA can be claimed by the leasing firm providing an electric van to the customer.

Fuel duty

As announced at Budget 2009, fuel duty will increase by one penny per litre in real terms on 1 April each year from 2010 to 2013.

DYNAMIC VEHICLE SOLUTIONS comment: We are disappointed that the Chancellor has failed to defer the planned 1p rise to help support business users. The commercial vehicle sector alone contributes over £4 billion in road taxes and the increase does nothing to support ailing UK transport operators. Dynamic Vehicle Solutions beleive HMRC should investigate an essential user fuel rebate. With around 40% of the UK truck parc aged over eight years, the we also believe that the Chancellor should have introduced some form of incentive scheme that would enable embattled commercial vehicle operators to purchase and lease more environmentally friendly Euro IV or Euro V vehicles.

Vehicle Excise Duty

There is no postponement on the introduction of the first year rate to be introduced in April 2010 for cars.

General business tax changes

Corporation tax

Small business (profits not exceeding £1.5 million) will not see the planned corporation tax rise being implemented next year - the rate will therefore remain at 21% in tax year 2010/11 and increase to 22% in tax year 2011/12.

The main corporation tax (profits exceeding £1.5 million) rate will remain at 28%.

Enterprise finance guarantee scheme

The Enterprise Finance Guarantee (EFG) provides participating lenders with a 75% Government guarantee on individual loans to viable businesses with turnover of less than £25 million that are at the margins of commercial lending. The EFG will be continued for a further 12 months until March 2011.

National insurance increase

Employee, employer and self-employed rates of National Insurance Contributions (NICs) will increase by 0.5 per cent in April 2011. This is in addition to the 0.5% increases to rates already announced, making a 1% increase in total from 6 April 2011.

VAT

The 15% VAT rate will revert to 17.5% on 1 January 2010.

Other transport measures

Additional funding for low carbon vehicles

There will be an additional £30million funding for low-carbon vehicles, including an expansion of the Technology Strategy Board's ultra-low carbon vehicles competition.

Biofuels

To support the value of biofuel production, the price of 'buying out' of the Renewable Transport Fuel Obligation will increase to 30 pence per litre from 2010-11.

Hard-shoulder running

The Government has approved the £400 million M1 improvement scheme which increases capacity from Junctions 10-13 through hard-shoulder running.