What are the top 10 issues for small fleet operators to watch out for in 2010?

1. Value Added Tax: January 2010

Value Added Tax (VAT) will return to the standard rate of 17.5% on January 1, 2010. The 2008 Pre-Budget Report announced a temporary reduction in the standard rate to 15% for a 13-month period from December 1, 2008, to December 31, 2009.

The change was introduced by the Government in an effort to stave off the effects of the recession. However, with VAT returning to its standard rate, fleets need to prepare for the effect it will have on the services and products it buys, especially where fuel is concerned. 

For outright purchase fleets, it will increase prices on new cars – VAT on a £10,000 car will rise from £1,500 to £1,750, making the car £250 more expensive. VAT will also increase the cost of service and repairs.

2. Scrappage scheme: February 2010

The Government’s scrappage scheme is predicted to end in February 2010 when funds finally dry up. Motorists currently receive a £2,000 discount for trading in cars more than 10 years old or vans more than eight years old, and the £300 million pot was boosted by an additional £100 million in October.
The scheme has seen manufacturers put greater emphasis and funds behind private retail business. When the scrappage initiative ends, they are expected to start to push harder for fleet sales, which should make discounts easier to obtain for smaller companies.

3. Fuel duty: April 2010

Fleets of all sizes have had to contend with pump price volatility over the previous 12 months and further increases are set to take effect in 2010. However, while the global oil price may fluctuate, fleets need to prepare for an increase announced by the Chancellor in April 2009. 

From April 1, there will be a 1p per litre plus inflation increase in fuel duty. It is the first of a series of four increases, which will be effected once a year from April 2010 to April 2013.

For a car averaging 30mpg over 10,000 miles, a 1p per litre increase will add around £15 to its annual fuel bill. Four annual rises will, therefore, inflate the bill by £60.

4. Insurance: April 2010

The Ministry of Justice will introduce new rules from April 2010 for the claims process for road traffic accident personal injury claims valued between £1,000 and £10,000 – around 80% of all motor personal injury claims.

The new rules govern how quickly road crash claims where fault is not disputed are settled – liability must be admitted within 15 days. Fleet managers must ensure drivers report crashes immediately and have in place a system that quickly notifies their insurer.

5. Company car tax (Benefit-in-Kind): April 2010

The lower CO2 emissions threshold for company car tax will reduce by 5g/km from April 2010, with a 3% surcharge applying for diesel models.

Currently, a car must have CO2 emissions between 121 and 139g/km to be taxed on the basis of 15% of the car’s list price (plus 3% for diesel); for 2010/11, that figure will be between 121 and134g/km (plus 3% for diesel).

6. Vehicle Excise Duty: April 2010

Newly-bought cars will have a new first-year vehicle excise duty (VED) rate based on the CO2 emissions of the car from April 2010, known as a ‘showroom tax’. Businesses buying new models that are the most polluting (more than 255g/km) will pay VED of £950 in the first year of owning the vehicle. After that they will pay vehicle excise duty of £455 per year.

Cars are divided according to their emissions with differing levels of showroom tax applicable, but cars which emit less than 130g/km will pay no car tax at all in the first year. Meanwhile, the Government will further separate out the 13 VED bands from April. 

In addition, the standard VED rate for LCVs registered on or after March 1, 2001 will increase by £15. The discounted rate for eligible light goods diesel vehicles achieving early compliance with Euro IV and V emissions standards will be frozen.

The higher band rates for cars and LCVs registered before March 1, 2001 will increase by £15 and the lower rate will be frozen.

7. Fuel rates review: May 2010

Advisory Fuel Rates may have just been reviewed, but the small fleet operator needs to be aware that a further review will take place in May 2010. HM Revenue and Customs (HMRC) will be looking at the figures and publishing the changes towards the end of May before they come into effect on June 1.

The rates are used to reimburse company vehicle drivers for fuel used for business journeys.
However, HMRC may change the rates if fuel prices fluctuate by 5% and if it believes the price change will be sustained.

8. General Election: by June 2010

A General Election to elect the new Parliament must be held by no later than Thursday, June 3, 2010. Conservative leader David Cameron plans to hold an emergency Budget within 50 days if his party wins the next General Election. 

He said measures in its Budget would include the previously announced plans to cut the rate of corporation tax and tax breaks for new business start-ups.

9. Pre-Budget Report: by December 2010

The Pre-Budget Report (PBR) is one of the two economic forecasts that HM Treasury delivers to Parliament each year, the other being the Budget. 

The Chancellor has delivered the PBR in November or December each year since Labour came to power in May 1997, apart from 2007 when it took place in October.

10. Residual values: 2010

10 Recent fluctuations in the used car market have been likened to a rollercoaster ride, with sharp declines in 2008 and record improvement during 2009.

The drop in new fleet registrations in 2008/09, caused by companies lengthening replacement cycles, will reduce the supply of vehicles into the marketplace for the next few years, which should keep values strong. 

Next year, however, this will be offset by a greater number of the replacement-delayed vehicles returning to market which will mean wholesale values stay flat.