Road tax changes give companies opportunity for savings
12 February 2010
Major changes to road tax linked to CO2 emissions announced at last year’s Budget and due to take effect from April have increased the importance of careful vehicle choice and given companies the opportunity to make savings on the funding of their business cars.
By switching from one model to a similar but lower-emitting alternative within the same class, businesses can make substantial savings vehicle over three years because of the impact of the road tax changes.
The 2009 Budget announced that going forward road tax would be linked to CO2 emissions, a move designed to make the lowest carbon emitters more attractive and the most polluting less attractive to buyers.
Last April the number of road tax bands was increased from seven to 13, designated A-M. As the table shows the rates varied from £0 (Band A) for cars with CO2 emissions up to 100 g/km to £440 (Band M) for cars with CO2 emissions over 255 g/km.
But from this April, a new first year road tax rate is being introduced. Low emission cars - up to 130 g/km will pay £0 - while the highest emission cars (over 255 g/km) will pay £950, a move dubbed as a ‘showroom tax’ as the Government seeks to discourage the uptake of the highest polluters.
The standard rate of road tax in 2010/11 for cars already registered is also shown in the table.
The new rates make cars over 160g/km particularly unattractive for companies to operate, and rise progressively more steeply as their carbon emissions increase. Cars at the higher end of the carbon scale face particularly onerous charges from April.
Martin Brown, managing director of Fleet Alliance, said the new charges meant that savings in acquisition costs could be made by planning fleet policy around vehicles which emitted as low emissions as possible.
”The road tax changes announced at last year’s Budget and which come into effect this April, will increase the cost of registering new cars across the board, but are particularly severe on vehicles with over 160g/km of carbon emissions.
“This is clearly in line with Government thinking on capital allowances, for which the key benchmark is also 160g/km, and which makes cars emitting more than this level of carbon dioxide increasingly unattractive from a tax point of view.
“It is now time for fleet operators to review the models they are going to be ordering this year and which they will have on the fleet for three years or more as there are major financial incentives to pick low carbon-emitters.
“Simply by switching to a sub 130g/km model will save you £115 in the first year of registration. Multiply that across several hundred vehicles and there are major savings to be made.
“Obviously these are currently smaller cars, but engine technologies are continually improving while the choice of vehicles emitting less than 120g/km is increasing all the time.
“With the right planning and guidance, it is perfectly possible to design a fleet policy to cater for almost every taste and still achieve substantial savings in road tax, “he said.
To find out how to tailor your fleet policy to make the maximum savings in road tax, please contact Fleet Alliance on 0845 601 8407; email info@fleetalliance.co.uk; or visit the website www.fleetalliance.co.uk
12 February 2010
Major changes to road tax linked to CO2 emissions announced at last year’s Budget and due to take effect from April have increased the importance of careful vehicle choice and given companies the opportunity to make savings on the funding of their business cars.
By switching from one model to a similar but lower-emitting alternative within the same class, businesses can make substantial savings vehicle over three years because of the impact of the road tax changes.
The 2009 Budget announced that going forward road tax would be linked to CO2 emissions, a move designed to make the lowest carbon emitters more attractive and the most polluting less attractive to buyers.
Last April the number of road tax bands was increased from seven to 13, designated A-M. As the table shows the rates varied from £0 (Band A) for cars with CO2 emissions up to 100 g/km to £440 (Band M) for cars with CO2 emissions over 255 g/km.
But from this April, a new first year road tax rate is being introduced. Low emission cars - up to 130 g/km will pay £0 - while the highest emission cars (over 255 g/km) will pay £950, a move dubbed as a ‘showroom tax’ as the Government seeks to discourage the uptake of the highest polluters.
The standard rate of road tax in 2010/11 for cars already registered is also shown in the table.
Road tax |
CO2 emissions |
2009-10 |
2010-11 |
|
First year |
Standard |
|||
A |
Up to 100 |
0 |
0 |
0 |
B |
101-110 |
20 |
0 |
20 |
C |
111-120 |
30 |
0 |
35 |
D |
121-130 |
90 |
0 |
95 |
E |
131-140 |
110 |
115 |
115 |
F |
141-150 |
120 |
125 |
125 |
G |
151-160 |
150 |
155 |
155 |
H |
161-170 |
175 |
250 |
180 |
I |
171-180 |
205 |
300 |
210 |
J |
181-200 |
260 |
425 |
270 |
K |
201-225 |
300 |
550 |
310 |
L |
226-255 |
415 |
750 |
430 |
M |
Over 255 |
440 |
950 |
455 |
The new rates make cars over 160g/km particularly unattractive for companies to operate, and rise progressively more steeply as their carbon emissions increase. Cars at the higher end of the carbon scale face particularly onerous charges from April.
Martin Brown, managing director of Fleet Alliance, said the new charges meant that savings in acquisition costs could be made by planning fleet policy around vehicles which emitted as low emissions as possible.
”The road tax changes announced at last year’s Budget and which come into effect this April, will increase the cost of registering new cars across the board, but are particularly severe on vehicles with over 160g/km of carbon emissions.
“This is clearly in line with Government thinking on capital allowances, for which the key benchmark is also 160g/km, and which makes cars emitting more than this level of carbon dioxide increasingly unattractive from a tax point of view.
“It is now time for fleet operators to review the models they are going to be ordering this year and which they will have on the fleet for three years or more as there are major financial incentives to pick low carbon-emitters.
“Simply by switching to a sub 130g/km model will save you £115 in the first year of registration. Multiply that across several hundred vehicles and there are major savings to be made.
“Obviously these are currently smaller cars, but engine technologies are continually improving while the choice of vehicles emitting less than 120g/km is increasing all the time.
“With the right planning and guidance, it is perfectly possible to design a fleet policy to cater for almost every taste and still achieve substantial savings in road tax, “he said.
To find out how to tailor your fleet policy to make the maximum savings in road tax, please contact Fleet Alliance on 0845 601 8407; email info@fleetalliance.co.uk; or visit the website www.fleetalliance.co.uk
Phone: 0845 601 8407 | Email: info@fleetalliance.co.uk | Legal information |
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