ACFO pre-Budget submission to Chancellor calls for tax stability and sound forward planning to encourage efficient fleet management

London, March 31 -- Chancellor of the Exchequer Gordon Brown is expected to announce a further tightening of the company car tax system from April 6, 2005 in next month's Budget.

However, ACFO (the Association of Car Fleet Operators) has called on the Chancellor to make 'the minimum possible reduction' in the CO2 threshold level, from its 145 g/km of CO2 for 2004/05, for the 2005/06 tax year.

ACFO, in its submission document ahead of the April 9th Budget, says: "Members are concerned about the mid- to long-term viability of their fleet strategies, beyond the known scale of CO2-driven factors, which ends on April 5, 2005. We would ask that the Chancellor provides as much advance notice as possible, of any movement in the lower CO2 emissions threshold."

While calling for company car tax levels beyond 2004/05 to be announced as soon as possible, ACFO, is urging the Chancellor not to make any 'material changes to the taxation envelope'.

The likely benefit-in-kind tax announcement by the Chancellor comes at a time when vehicle manufacturers are committed to reducing average CO2 emissions for new cars to 140 g/km by 2008 under an agreement between the European Commission and the European Automobile Manufacturers Association (ACEA).

However, ACFO has warned the Government that manufacturers are struggling to meet ever-tighter emission standards and that it is widely anticipated that vehicle list prices will have to increase, to provide a realistic return on research and development costs.

Therefore, ACFO has warned the Chancellor not to be 'too aggressive, against what is technically possible and affordable'.

ACFO director Stewart Whyte added: "We have no issues with a powerful environmental component to this benefit-in-kind taxation. But driving the company car tax regime ahead of what vehicle manufacturers can realistically deliver could be very harmful. If the company car tax regime is too stringent in comparison with the choice of vehicles available, employees will opt out of the company car.

"That means there is no control over what staff will drive from both environmental and safety viewpoints. The Government will then not achieve any of its objectives in those areas - reducing emission levels, improving air quality, and improving at-work driver safety."

He added: "Mid-term uncertainty must be clarified so fleet managers can refine their vehicle allocation policies and listings, which meet as best as possible, the commercial imperatives of their businesses, driver expectations, realistic and 'fair' levels of taxation, and the Chancellor's legitimate environmental and fiscal goals.'"

Meanwhile, ACFO members are concerned that the Inland Revenue's long-expected consultation document on the reform of benefit-in-tax on the private use of vans has yet to be published.

ACFO's submission says that for the purposes of 'good forward business planning' an announcement should be made against a realistic timetable to 'remove the uncertainty' facing businesses and their staff.

ACFO is also seeking clarification on the new CO2-based fuel scale charge system that comes into effect on April 6 2003. To establish how much tax an employee receiving 'free' fuel for private use pays under the new structure, the same percentage figure used to calculate the car benefit charge is multiplied by a set figure for the tax year: for 2003/04 it is £14,400.

With no information currently available on how or when that figure might move in the future, ACFO says: "To help fleet operators who seek to develop longer-term fleet strategies, some clear indication of how and when the gross fuel value will change, would be helpful."

ACFO believes that the Chancellor may also use the Budget to announce changes in Vehicle Excise Duty that are expected to include a widening spread of duty rates within the five-band structure, and an increase in the highest rate of VED paid on cars emitting 186+ g/km of CO2.

In conclusion ACFO says that there is 'an overarching desire' within the fleet industry for tax stability against a recent background of unprecedented change covering tax issues, the introduction of congestion charging and the launch of the EU 4th Motor Insurance Directive.

Notes td Editors

ACFO Ltd is a non-profit making organisation, and is the largest UK body representing the interests of businesses which operate cars and vans as part of their normal commercial activities. There are some 700 members, collectively responsible for over 600,000 vehicles in the UK fleet market.

Members are represented within ACFO by a named delegate, usually the fleet or transport manager. There is, however, a very wide range of job titles involved, reflecting the different styles of fleet operation. ACFO provides both a national representation platform, and regional networking opportunities, to support its key objective of improving the discipline and craft of fleet management, and its status.

Web Site URL: http://www.acfo.org/

Further information can be obtained from: Stewart Whyte, Public Relations Officer, ACFO Ltd, Rivendell House, 2 Winton Road, Petersfield GU32 3LL. Tel: +44 (0)1730 260162, Mobile: +44 (0)7765 403103, Fax: +44 (0) 17 30 26 39 37, Email: info@acfo.org