The Budget’s impact on your company vehicles



The Chancellor has announced one of the biggest reforms to motoring in recent years. Companies will face significant differences to their vehicle tax due to a radical shake up of the current Vehicle Excise Duty (VED), which will see only zero-emission cars exempt.

From 1 April 2017 fleets investing in greener cars will unfortunately see themselves paying a higher tax rate than usual. The new VED system will be whittled down to three tax bands: zero emission, standard and premium, with lower emission vehicles being grouped under the standard flat rate charge of £140.

The previous regulations for VED would have seen three quarters of cars exempt owing to improvements in vehicle emission efficiencies. However, the new system will see new cars paying tax based on updated emissions ratings that take improved environmental technology such as hybrid and electric cars into account.

The advantage for fleets will be that the revenue generated from the new VED regulations will entirely be put to the development and maintenance of our roads. In fact, the Government estimates that the changes to the existing VED would raise more than £3bn in the first three years, with every penny going to a designated road fund.

Additional impacts on motoring:

  • Companies will breathe a sigh of relief that fuel duty will remain frozen this year
  • Further road improvements planned including a £14 million investment to local road networks
  • There will be talks to extend the length of time for the first MOT from three to four years for new cars
  • Insurance premium tax will be increased from 6% to 9.5%

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