Authorised Mileage Allowance Payments (Amaps) are to be reviewed following the Budget. However, the Chancellor made few other announcements in relation to cars save for changes to vehicle excise duty and fuel duty.
Background documentation on the Budget revealed that the Treasury is to look at changing the structure of Amaps to ensure that rates and thresholds are set at a level to promote environmentally-friendly business travel. Any subsequent changes are due to be unveiled in the pre-Budget report.
It had been widely expected that the Chancellor would announce further changes†in light of the government’s drive to protect the environment. In particular, it had been thought that he would make changes to Employee Car Ownership (ECO) Schemes to make them less tax-effective.
Nick Sutton, chairman of Provecta Car Plan, welcomed the decision to look at tying Amaps rates to the type of car being used and its carbon emissions. “I was expecting to see that they would come to some conclusion and say ‘look we accept that ECOs is part of the modern provision of car benefit for employees’ and for them to put some clear guidelines over what they deem to be acceptable and not be acceptable, so it was a bit disappointing that didn’t come out,” he said.
The Chancellor did announce that vehicle excise duty rates would be altered from 22 March this year to encourage the purchase of environmentally-friendly cars. This includes:
• Raising the rate for the most polluting cars (band G) to £300 in 2007-2008 and to £400 in 2008-09.
• Reducing the rate for low-carbon band B cars to £35 in 2007-08 and keeping it frozen at that rate for the subsequent two years.
Alistair Kendrick, a partner at accountancy firm Wilder Coe, said he didn’t think the vehicle excise duty increases were sufficient enough to affect company car provision. “I don’t think that is big enough to impact on an employer at the moment. If they were going to put £1,000 on vehicle excise then people might ask should we stop letting people have these less green vehicles.”
Gordon Brown also announced that the company car tax rates would remain frozen and that the company car fuel benefit charge multiplier will stay at £14,400 for 2007-08.
Changes to fuel duty were also announced:
• An increase of 2 pence per litre on fuel duty deferred until 1st October 2007.
• The duty on Liquefied Petroleum Gas will decrease by 1p per litre.
• The duty incentive on biogas is to remain at its current level until at least 2011-12.