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Tax: key points of the Budget 2007

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22 March 2007

BioFuel Saab

Biofuel Saab – qualifies for 2% discount

 

The Chancellor has signified that he wants business motoring to have a reduced environmental impact.

The broad thrust was to impact on business car costs for those vehicles with higher emissions; and reduce business car costs for those with lower emissions. The key points to consider are these:

Vehicle Excise Duty (for cars registered from March 2001)

  • Raised VED for band G cars (226g/km CO2) to £300 in 2007-08; and £400 in 2008-09. Change from 22 March 2007
  • Cars in band A (below 100g/km CO2) continue to attract no VED
  • Cars in band B (101g/km to 120g/km) receive VED reduction: petrol/diesels pay £35; alternative fuel £15
  • Cars in bands C-F: harmonisation of petrol/diesel VED prices

Approved Mileage Allowance Payments (AMAPs)

  • Decision deferred. But likely outcome is change to current 40p / 25p rates and the mileages at which they can be claimed. This is important: many small businesses use AMAPs to claim for business mileage undertaken in their private cars.

Fuel duty rates

  • Increased by 2p per litre from 01 October 2007
  • Further increases of 2ppl in 2008-09; and 1.84ppl in 2009-10
  • Current 20ppl biofuel differential extended to 2009-10

Company Car and Fuel Benefit Tax

  • Company car 15% threshold remains at 135g/km for 2009-10
  • Company cars capable of running on E85 biofuel will receive a 2% discount ‚Äì from 06 April 2008
  • The Company Car Fuel Benefit Charge multiplier will remain frozen at £14,400 for 2007-08

Capital Allowances

No final decision but government wants to push businesses towards more environmentally-friendly travel. Its preferred option is three-tier, with higher polluting cars disadvantaged. Note: the government’s stance is that a higher polluting car has emissions over 165g/km (VED band E and above).

  • Retain 100% first year writing down allowance for cars with emissions up to 120g/km CO2
  • Use general plant and machinery capital allowances pool for cars with emissions between 121g/km and 165g/km
  • Introduce new pool with lower writing down allowance for cars with emissions above 165g/km

 

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Ralph Morton

Ralph Morton

Ralph Morton is an award-winning journalist and the founder of Business Car Manager (now renamed Business Motoring). Ralph writes extensively about the car and van leasing industry as well as wider fleet and company car issues. A former editor of What Car?, Ralph is a vastly experienced writer and editor and has been writing about the automotive sector for over 35 years.

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