Fleet companies taxes to increase despite being greener 0

Fuel efficient fleet companies are set to receive a tax increase.

Figures from Her Majesty’s Revenue and Customs (HMRC) show that taxes in which companies pay for their cars has dramatically declined in recent years. In the tax year 2002/03, companies paid £1.68 billion for car tax whereas 2008/2009 figures showed that only £1.25 billion was paid out.

Those figures represent quite a fall. It is for that reason that Government are keen to increase taxes for car companies. National Insurance Contributions have also dipped to a similar extent when comparing similar tax years. In 2003/04 approximately £600 million was paid whereas £530 million was paid in 2008/09.

From the figures stated above, it is very clear to see that the Government has pulled back in the amount of tax that it is collecting from fleet companies. How have the Government compensated for such a loss? The simple answer would be that of increasing tax on fuel. 2001/02 saw £21.916 billion in fuel tax whereas £27.256 billion in 2010/11.

Fleet companies using environmentally friendlier vehicles

The tax hike is expected to come despite fleet companies adopting a more environmentally friendlier way of operating. Thanks to companies trending towards more fuel efficient cars, the average emissions have dipped. In 2010, the average C02 emission figure was 143g/km whereas 2011 was 140g/km.

Mike Walters, who analysed the major car company Arval, said echoed this by saying fleet companies are looking for more sustainable cars.

“In recent years the manufacturers have delivered a raft of more sustainable vehicles to market providing better mpg performance and reduced CO2 emissions. This has supported companies, and their drivers, in selecting tax efficient company vehicles that are fit for purpose.”

David Raistrick who works for Deloitte as their UK manufacturing leader has expected this particular pattern to continue in the following years. He said “Looking ahead to the next five years, we expect the UK market to be dominated by fuel efficient vehicles as a result of an increase in environmental awareness, consumer efforts to reduce motoring expenses and tax legislation – strongly shifting the balance to lower emission vehicles.”

An analysis of the UK’s largest fleet companies showed that the average mileage from them has decreased in recent years. The findings said that fleet companies travelled an average of just 15,194 miles rather than 16,772 last year.