Author: Ralph Morton
If you’re a sole trader with a van, a small business with a few business cars, or an SME with a small fleet, the Chancellor’s Budget meant only one thing: more cost to business.
Although we have record fuel prices, the Chancellor decided that fuel duty would increase by 3.02ppl from 01 August 2012. Of course, there will be the VAT to go on top of that as well…just in case you’d forgotten. So make sure you fill your tanks by 31 July.
And none of the other parameters have changed for claiming business mileage or fuel.
If you run your private car or private van on business, then the AMAP rates to reimburse you for business use – which were raised in last year’s Budget – remain at 45p per mile (up to 10,000 miles), and 25p per mile thereafter.
- Go here to see the rates for using your own vehicle on business – Tax: Mileage rates for using a private car or van on business
If you drive a company car then you have to use the Advisory Fuel Rates to avoid benefit in kind for ‘free fuel’. These change on a quarterly basis; the next change is 01 June but the one that matters is 01 September – so you will have a full month or higher fuel costs with AFRs set at a lower rate. One to watch.
- Go here to see the current AFR rates – Tax: Company car business mileage rates
Talking of free fuel – it’s getting more costly. Often perceived as a brilliant perk, you really have to put in the miles to make it work in your favour. Otherwise you could be paying for the privilege. Which is daft if you’re a director of your own business – your firm is paying for the fuel and then you personally are paying additional tax for that fuel your firm has provided!
The nitty gritty details are that the fuel benefit charge multiplier is increasing from £18,000 to £20,200. Unless it’s for a van or pickup. In which case it remains at £550.
Paul Jackson, managing director of TMC a mileage audit specialist commented:
“A pleasant surprise from the Chancellor over fuel duty was never on the cards. And if it had been, a 2p or 3p relaxation in duty would quickly be wiped out in a few months if oil prices carry on rising. High fuel costs are a tough nut for businesses to crack but the Chancellor sent a clear message that he expects firms to tackle the challenge via operational and policy decisions, not by trying to appeal to his better nature.”
Now Paul is undoubtedly right. But it’s the here and now that small businesses need to worry about with the current cars and vans at their disposal. Which can only mean this: additional financial pain.
We have a complete guide to the Budget 2012 and its implications for business motoring and company car tax in the following stories, but starting with some informed comment on the Budget and its business car issues from our expect David Rawlings, a director with consultancy firm BCF Wessex.
Read David’s article here: Budget 2012: the future of company cars.
Other Budget 2012 stories
- Company car tax tables for tax years 2012/13 to 2014/15
- Tax: Mileage rates for using a private car or van on business
- Vehicle Excise Duty in 2012/13
- Vehicle Excise Duty 2012/13: light commercial vehicles
- Budget 2012: free fuel allowance
- Budget 2012: company car leasing allowances
- Budget 2012: company car writing down allowances
- Budget 2012: company van tax