ACFO action plan awaits Budget statement response
ACFO, has issued a five-point action plan to Chancellor of the Exchequer George Osborne, which they have asked to be answered in the coalition Government’s Budget statement on Wednesday, March 23.
1) Company car benefit-in-kind tax rates for at least 2013/14 and ideally 2014/15 as well. Rates are known for the next two financial years – 2011/12 and 2012/13 – but employees now deciding on their next company cars remain in the dark as to how much their tax bill will be from April 6, 2013.
2) The removal of the out dated and inappropriate 3% company car benefit-in-kind tax surcharge that applies to all diesel cars
3) Cancellation of the inflation rate + 1p a litre fuel duty rise scheduled for April 1, which could add around 5p to the cost of a litre of both petrol and diesel
4) Vehicle Excise Duty for sub-3.5 tonne light commercial vehicles to be linked to their carbon dioxide (CO2) output in a similar structure to cars thus incentivising the uptake of low emission vans
5) A full review of the Approved Mileage Allowance Payments (AMAPs) system.
Having already been successful this year in influencing the Government’s policy on Advisory Fuel Rates following a recent meeting with HM Revenue & Custom’s officials the organisation now hopes that its requests will be met with approval by Mr Osborne.
ACFO chairman Julie Jenner said: “We are assuming that HMRC will revise rates upwards to take account of the growing disparity between current published rates and real-life fuel costs. If that is the case then we are very pleased and the move underlines ACFO’s influence in the corridors of power.”
However, ACFO remains concerned that rates will only change following its representations despite the ‘more than 5%’ trigger mechanism built into the system. Julie said: “Fuel prices have increased further since our meeting and there is every likelihood they will rise again. We need assurances that in the future employees who use the Advisory Fuel Rates are not out of pocket and that rates increase when fuel prices rise.
“Additionally, the current rate structure is linked to vehicle engine size and fuel type and we believe there is a powerful case that the basis for bandings should now switch to CO2 emissions levels.”
Referring to AMAPs, Julie said: “Rates should be set at levels so that they genuinely reimburse drivers for the cost of running a car. We also believe they should be aligned to a vehicle’s CO2 emissions so they encourage the uptake of low emission vehicles.
Commenting on the historic 3% benefit-in-kind tax supplement applying to diesel company cars, Julie said: “This has been a feature of the current tax system since it was introduced in 2002. At the time diesel cars were nowhere near as environmentally efficient as they are today. As diesel cars have lower CO2emissions than equivalent petrol engine models drivers should not be financially penalised for selecting them.”
Governments have in the last decade announced company car tax benefit-in-kind rates on a three-year cycle however, said Julie: “That routine has broken down. It is a concern that employees are taking delivery of new cars now and have no idea of how much tax they will be paying on a vehicle they will still be driving in 2013/14. Additionally, with some company cars now being driven into a fourth year it would be helpful if rates were announced on a four-year cycle.”
Finally, ACFO has also joined the call to axe the planned April 1 fuel duty rise, “Amid continuing economic uncertainty, rising inflation and businesses struggling to contain costs it makes no sense to heap further financial pressure on companies through the tax system,” said Julie.
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