2011 Budget comment: Mazars

Alastair Kendrick comments on yesterdays budget and the impact it may have on fleets.

"The budget contained a number of changes to the taxation of company cars and for those employees who use their own car on business travel. The decision to increase the approved mileage allowance rate (AMAP rates) will have been a surprise to many but it is 2002 since they had last been revised. There is a clear division of opinion within the fleet industry over whether this rate should be revised and this will depend on whether you believe the calculation of the rate should take account of all motoring costs or simply the marginal costs involved in using that car on a business trip. The rates have always been based on the total costs and any attempt to revise the position would create a significant unrest, this was evidenced by the responses HMRC have received to consultations on this subject over the years. The move from 40p to 45p for the first 10,000 business miles is welcome but many employees will consider it does not go far enough."

"The various changes announced in the budget with the increase in AMAP and the increase in taxable benefit on company cars will lead many to believe that it is time to once again consider whether they should provide a company car or move to providing a cash allowance or employee car ownership arrangement. Many employers who have previously considered this point may wish to review again their figures based on the additional savings that the payment of AMAP can generate."
 

"It will be interesting to see what impact the budget announcement will have on the UK fleet industry."