Fuel duty will increase by two pence per litre on 1 September and subsequently by one pence per litre in real terms on 1 April each year between 2010 and 2013.
The change was announced by Chancellor Alastair Darling in this year’s Budget report in order to support fiscal consolidation.
Miles Consultancy comments:
Mileage capture and fuel management specialists The Miles Consultancy (TMC) said the ever-increasing rate of fuel duty meant the actual cost of mileage for many cars was now higher than the government’s own advisory rates.
Chancellor Alistair Darling announced a two pence per litre increase in fuel duty from September in his Budget on April 22, to be followed by a further penny per litre increase scheduled for each year from 2010 to 2013.
TMC managing director Paul Jackson said: “TMC are getting more and more calls from corporate customers whose employees are not able to do business mileage without it costing them more than the advisory rates.
“Therefore this rise in duty from September will only increase the number of customers moving to our ‘mileage reimbursement at cost scheme’ ensuring the employee does not see the extra cost being paid for by them.”
He said the government’s plan for a ‘scrappage’ scheme – also announced in the Budget – where new car buyers get a £2,000 discount when scrapping an existing vehicle over ten years old, would not have a significant impact on the fleet sector.
He added: “This is of very little consequence to 99.9 per cent of fleets as both cars and vans are changed before they are five years old; also the manufacturers are already discounting vehicles considerably, so the real effect of the scheme will be that the government gives £1,000 and the industry will assign part of the previous discounts as their £1,000, so this is where £1,000 plus £1,000 equals £1,000, not £2,000.
“That said I’m sure the scheme will get rid of a few hundred of the most polluting and unsafe cars on the road today.”
In response to the announcements made today in the Chancellor of the Exchequer’s Budget regarding the increase in fuel duty by 2p per litre, Matthew Hunnybun, partner, PricewaterhouseCoopers LLP, said:
“Changes in fuel duty impact both individuals and UK businesses. One in three companies already prefer employees to use public transport for business travel and increasing fuel duty is likely to cause this preference to increase.
“While business travel by car is an essential part of doing business for some organisations, such as those with a travelling sales-force, cash-strapped companies looking to control costs can make savings by removing private fuel allowances for employees. This may be an unpopular change but, with businesses looking to reduce costs where they can without reducing headcount, the downturn is a good time to tackle these sacred cows. This option would be a particularly appealing move for those companies looking to improve their green credentials.
“Over a third of companies have a green transport plan currently – fuel duties could drive this number up further.”
Data is from the PricewaterhouseCoopers LLP Company Car UK report, released this month. It is based on 154 companies with revenues ranging from £1m to over £35bn.
Company Car UK – Key findings:
Over a third of companies (35%) now have a green transport plan; this compares with one in four (24%) in last year’s survey
One in three organisations that offer company car benefits to employees place a CO2 emissions limit on employees’ choice of car
Median average fleet emissions are 157g/km, which is under the 160g/km threshold that attracts more tax liabilities (reduced from 164g/km in 2008)
One in three companies prefer employees to use public transport for business travel
89% of respondents consider managing fleet costs to be a priority
Two in five companies will reallocate leavers’ cars to new joiners
One in four companies plan to extend lease periods
One in four companies intend to reduce choice of car
Since the corporate manslaughter legislation became effective, in addition to the Health and Safety Offences Act 2008 (effective January 2009), 71% of companies have reviewed their policy to ensure it is compliant.