What Does the Budget 2012 mean for Motorist’s

Yesterday marked that time of year again. When most of the country holds its breath at listening to the Chancellor of the Exchequer potentially ruin or save our year when it comes to your money.

As with all budgets the motor industry was affected with changes, this year Company Car’s saw some limelight as did other commercial vehicles.  The government has concentrated hard of emissions output and reformed the way a company car’s emissions are taxed. This year the budget abolition of the 120g/km CO2 emissions threshold for company car tax calculations. In its place, starting from April 6^th, is a revised sliding scale system where the percentage rate for cars with CO2 emissions of 100-105g/km is 11%, increasing by 1% for every 5g/km to the maximum of 35%.

A positive includes the plans to abolish the Diesel Car Tax law in April 2016, meaning that Diesel drivers will no longer have to pay 3% more tax than petrol drivers.

Petrol

Probably the most significant announcement during the budget is the confirmation of the rise in Fuel duty increases by 3.02p per liter on August 1, 2012. Although this plan had been in the pipeline for a while, many people had thought (and hoped!) Mr. Osborne would abolish the idea. However it was confirmed instead, meaning an even tighter budget for families already struggling to pay for fuel.

With fuel already averaging £1.40 a liter, come August I would not be surprised to see £1.45 a liter being paid in order to fill up your tank. Perhaps it’s about time motorists seriously considered a different mode of transport or making sure their next car is hybrid or electric.  

Commercial

Drivers of company vans, including ‘Double-Cab’ pick-up trucks, who use their vehicles for private mileage pay benefit-in-kind tax. For 2012/13, the charge rate for these vehicles is frozen at £3,000, or £3,550 if the employer also provides ‘free’ fuel for private mileage. The £550 charge for ‘free’ fuel will increase in line with RPI in April 2013.

This translates to annual tax payable on any company van used privately of £600 for a 20% tax payer, or £1,200 for a 40% tax payer. Where fuel is also provided for private use, the tax payable is £710 (20% tax payer), or £1,420 (40% tax payer). Employees who have to take their vans home to enable them to drive to customers in the morning, and who are not allowed other private use, do not pay a benefit tax charge.

For information on leasing company cars please visit our business car leasing page