According to the thousands of weekly checks that the Licence Bureau is undertaking, there are approximately 24,000 people driving illegally for companies in Britain today. In addition, 1 in 300 licences were found to be invalid during 2011.
Out of the non-compliant drivers that were checked by Licence Bureau, 43% were found to be driving on a provisional licence, 31% had their licence revoked and 9% were disqualified.
Moreover, the Driver and Vehicle Licensing Agency (DVLA) revealed a total of 652,380 drivers in the UK with either disqualified or revoked licences. This figure represents almost 2% of all the driver records held by the DVLA.
‘Driving is the most dangerous activity that most employees undertake as part of their working day’ said Malcolm Maycock, the Chief Executive of Licence Bureau.
In addition, Malcolm Maycock considers drivers that make false statements to their employees about their licences to be responsible for the increase ‘road risk’ in Britain. Taking in account the number of hours and number of miles a person does when driving for a business, his concern is understandable.
Furthermore, Mr Maycock encourages companies based in the UK to check the validity of their driver’s documents in order to make the roads a safer place. In this way he believes companies are protecting their business as well as protecting the safety of others.
Overview & Highlights
If the signals to businesses regarding the government’s desire to continue to drive down emissions whilst remaining ‘Neutral’ on the overall ‘Tax Take’ on company cars was not previously clear, it should be abundantly so following the 2012 budget.
The budget addressed all aspects of company car taxation, from the first year writing down allowances for low emitting cars, through to the benefit in kind paid on company provided ‘private fuel’. In each case the chancellor has revised emission thresholds downwards, to meet improved vehicle efficiency gains, and the value of the perceived benefit upwards, to reflect the increasing cost of motoring and in particular, fuel.
Corporation Tax Allowances Overhauled
The 100% first year writing down allowance for low emitting cars will be extended for two years to 2015, but based on a new lower CO2 threshold of 95g/km, down from 110g/km. Controversially, this allowance will not apply to cars bought by leasing companies, which means that they will no longer be able to pass these benefits on to their clients.
Possibly the most important piece of taxation for fleet policy-makers, is the reduction in the CO2 threshold where no lease rental dissallowance is incurred. Currently set at 160g/km, this threshold has been the key driver towards getting fleet policies to limit vehicle choice to those cars with a CO2 below 160g/km and has formed a ‘benchmark’ for responsible fleet operators.
Reflecting the improvements in vehicle efficiency over the past few years, the threshold has now been reduced to 130g/km, a much more aggressive level for these times which raises the bar for fleets to improve overall efficiency.
The new threshold, being introduced in April 2013, will cost existing fleets money and in some cases introduce more complicated depreciation pools, if cars are owned. Vehicle rentals will be subject to a 15% reduction in the allowable portion for corporation tax if they are leased, however, it is the catalyst that is needed to remind fleet operators of the need for continual improvement. Indeed some of Fleetworx’s clients are already attaining new vehicle delivery averages of sub 130g/km,despite having overall policy limits set at 160g/km, so the reality may be less painful than the change may suggest. Nevertheless, work will need to be done to make sure that costs are contained.
Personal Taxation – Scheduled Increases
Personal taxation has increased to reflect the improvements in manufacturer CO2 output and for the first time ever, the highest rate of benefit in kind will increase beyond 35% of list price to 37% in 2014. From 2015/16, Zero emitting cars will no longer be taxed at 0%, but will be taxed at the lowest threshold of 13%. This we believe reflects the fact that these vehicles will become more mainstream and a much more viable alternative for many drivers by that time.
Increases in taxable benefit over the next 3 years will be limited to 1% each year although fleets must be aware that increments jump to 2% per year beyond 2015/16, so choose a low emitting model, as whatever the taxable percentage is this April, you will be paying 6% more in benefit in kind before your 4 year contract is up. There is some good news for Diesel car drivers in that the 3% surcharge for diesel cars is being scrapped in 2016.
Fuel for Private Use – Taxable Reference Increases
Taxation of ‘private fuel benefit’ will increase at twice the rate of inflation to a value of £20,200 from April 2012. This means that very few drivers indeed will be better off having their employer pay for their private fuel and if they are better off, then they are likely to be costing their employers a fortune! With fuel duty increasing by 3p per litre, employers would be wise to review their policy on this.
Vehicle Excise Duty Continues to Rise in Line with Inflation
There were no real surprises regarding Vehicle Excise Duty (Road Tax) in this budget with increases being set in line with inflation. The result is a £5 per annum increase for everything up to 165g/km and £10 or more above that level.
AMAP Rates Static
AMAP rates have remained unchanged at 45p for the first 10,000 miles and 25p per mile thereafter for cars and vans. What this means in real terms is that there is a continued erosion in the value as fuel prices and the general cost of motoring increase.
AFR rates continue to reflect increasing cost of fuel
Although AMAP rates have remained static, the government continues to publish refreshed ‘Advisory Fuel Rates’ quarterly to reflect the changing price of fuel. These rates are those that the government will accept as a reasonable reimbursement of fuel costs and as such not subject to tax and national insurance contributions. Whereas certain dispensations can be sought where vehicles may be used in extreme conditions, it is generally accepted that these rates will be the maximum allowable for tax-free fuel reimbursement. The principles and content of this did not alter in the 2012 budget.
Altogether a budget for moving forward rather than standing still in fleet and with many of the changes imminent, one that requires action now!
Against a backdrop of the highest fuel taxation in Europe, HMRC has published new advisory fuel rates (AFRs) today with a 1p per mile increase for diesel fueled cars, dependent on engine size.
The rates, which are those set as ‘reasonable’ for businesses to repay drivers for fuel used for business mileage, will take effect from 1st March and follow the usual quarterly review.
Previously, the rates from September to December 2011 stayed exactly the same for all but LPG cars as did the rates from December to the end of February 2012, again with the exception of LPG fueled cars.
The new rates will put pressure on businesses to increase the amount that they pay drivers for fuel reimbursement but at the same time, businesses should be encouraged to increase the rate at which they deduct from employees who use fuel cards and reimburse for their private fuel costs.
The new rates are shown below, with the old ones in brackets:
Petrol
1400cc or less 15p (15p)
1401cc to 2000cc 18p (18p)
Over 2000cc 26p (26p)
Diesel
1600cc or less 13p (12p)
1601cc to 2000cc 15p (15p)
Over 2000cc 19p (18p)
LPG
1400cc or less 10p (10p)
1401cc to 2000cc 12p (12p)
Over 2000cc 18p (18p)
Fleetworx, the specialist fleet category management company, has this month launched it’s all new ‘Client Dashboard’ site, Fleetworx.net.
The site is designed to give Fleetworx’ domestic and international clients a ‘heads-up’ on the key costs and dynamics of their vehicle fleets, but also uniquely it also provides clear trends and projections that will assist in making strategic fleet decisions.
Graham Rees, managing director of Fleetworx and the architect of the system said “Our vision was to create an easy to access portal where our clients are able to pick up on the changes and trends relating to their vehicle fleet, that will ultimately support the tactical and strategic decisions that they will need to make. In addition, we recognised the importance, for our customers, of being able to track the impact of their savings initiatives over time, so we have put in place an on-line monitoring system to enable them to see how they are performing against target”.
The main dashboard provides a useful comparison with previous periods and ‘traffic light’ indicators of movement to draw attention to the most significant changes.
The system is intuitive and allows sufficient drill down so as to enable identification of specific supplier costs and dynamics in any period, and for the most helpful comparisons to be made across periods. Information is displayed graphically, with detail available at every data-point, which can be downloaded ‘as you see it’ at any point.
In the Governments ‘Autumn Statement’, Chancellor of the Exchequer George Osborne surprised many observers when he deferred the scheduled 3p per litre rise in fuel duty due in January. He went on further to disclose plans to cancel an inflation increase due in August 2012, worth around 1.92p per litre.
Consequently, as things stand, the rise in August will now be around 3p per litre. These initiatives reduced fuel duty by 10p over the announced rises, said the Chancellor. Mr Osborne also predicted that the policy changes would make the cost of filling up the average family car cheaper by around £144 per year.
AA president Edmund King welcomed Mr Osborne’s decision: “The chancellor has seen sense on this vital issue. Cash-strapped drivers will heave a heavy duty sigh of relief as current pump prices are close to the record high,” he said.
What is clear is that although families and business alike will benefit from the scrapping of the fuel duty rise, the underlying price of Brent Crude oil is rising exponentially, something the Chancellor cannot control.
Motoring journalist and TV presenter Quentin Wilson – also involved with the campaign group ‘FairFuelUK’ – welcomed the freeze in fuel duty, but insisted the campaign would continue.
“We are delighted the chancellor has been listening, and this vindicates our long campaign and in particular the epetition. A freeze is welcome, but we still feel that the chancellor should go further and reduce duty. A cut would be less money spent filling up and more released into the wider economy.”
Sources: BBC and Guardian.
The new Audi A4 promises to deliver even better tax and fuel efficiency across it’s range, with the 2.0TDi engine now emitting as low as 112g/km CO2, and delivering 67.2 miles to the gallon. A full range of petrol and diesel engines will be available, all delivering greater economy than before and lower CO2′s. However with BMW’s new efficient Dynamics packages poised to deliver sub- 100 CO2 figures, have Audi done enough?
A range of new active safety features, including cruise control that prevents you ‘rear-ending’ the car in front, a camera that monitors traffic in your ‘blind-spots’ and a ‘lane-assist’ system that adjusts your steering if you wander over the white lines, all promise to deliver enhanced safety for the occupants, however some might argue, will allow the driver to ‘switch off’ to the dangers around him too easily!
These features are by no means unique to Audi, but do perhaps give a clue to the direction of their thinking. We would not expect the take-up of these cost options to be substantial at this point but it is only a matter of time we would expect, for these to become part of the standard offering.
HMRC has won on appeal a case brought by Cheshire Employer and Skills Development Limited (CESDL), formerly Total People Ltd, which claimed that it had overpaid Class 1 National Insurance contributions between 2002 and 2006 amounting to £146,000.
In the original case CESDL stated that NIC’s should not have become payable on cash sums paid to drivers for the business use of their private cars and a refund is due. HMRC suggested that the NIC’s were accounted for correctly and that no refund is due.
In the original appeal found in favour of CESDL, however the recent decision has overturned that judgement saying that in the original appeal the tribunal asked itself the wrong question and therefore came to the wrong conclusion.
The first tier tribunal concluded that lump sum payments made were not ‘earnings’ because of their lack of link to salary increases and pension contributions, therefore there was nothing to suggest that NIC’s should be due on these.
The second tribunal does not challenge this but states the case that there was also nothing to suggest that these payments were for ‘Relevant Motoring Expenditure’, within the meaning of the reg 22A(3) which requires that the payment is a “mileage allowance payment”; there being no link to the actual mileage travelled. Hence the conclusion that the first tribunal had asked the wrong question and therefore come to the wrong conclusion.
Although on scrutiny of the legislation it is fairly obvious that there are technical points within this type of legislation that can be raised to challenge the type of payments made to employees and the relevant tax implications, as in this case, it is clear from this ruling that the legislation has carefully been drafted to be quite specific about what constitutes ‘motoring expenditure’ and the direct settlement of that.
It is also worth bearing in mind that if this case had succeeded, the cost to HMRC and therefore us, the tax payers, would have been immense, as as every ‘cash for car’ scheme operative clambered to reclaim NIC’s.
GE and Peugeot-Citroen (PSA) have chosen the Frankfurt Motor Show to sign an agreement which will see GE take 1000 electric vehicles from the motor manufacturer.
GE Capital, which operates 250,000 vehicles across Europe has committed to acquiring 25,000 electric vehicles worldwide by 2015. Not surprisingly given their origin, GE are committed to electric vehicles as playing a large part in fleet solutions in the future.
Clearly GE has bold ambitions compared with it’s peers in the sector, however we must remember that 25,000 cars represents just 1.5% of GE’s total fleet, so there is still a long way to go.
Businesses of all sizes are now realising that the cheapest mile that you can drive is the one that you never do. With fuel representing an ever increasing portion of the vehicle Total Cost of Ownership, the need to manage the miles driven on business and the fuel consumed has never been greater.
The single largest gap in fleet data that Fleetworx finds when it looks at fleet costs, right across Europe, is the miles that people are driving on business. Companies are blissfully unaware of the potentially fraudulent claims that may be being made for business miles that were private miles, and the fuel that may be going into other family members cars, courtesy of the company fuel card, and this is due to the fact that they have no mechanism to sense-check the behaviour of drivers.
On-line mileage capture systems, and the audit processes that support them are the best solution to this problem in our view, and we are now seeing more and more companies rolling out these control mechanisms across their fleets, where generally return on investment is significant, regardless of the fleet dynamics.
The question should be, not, can we afford to do this?, but can we afford not to do this?
According to a recent trial (the largest of its kind) carried out by ‘CABLED’ (Coventry and Birmingham Low Emission Demonstrators) and Mitsubishi Motors, Electric Vehicles (EV) are more than capable of meeting the need for efficient urban transportation.
Their findings show that over three-quarters of journeys undertaken lasted less than 20 minutes and only 2% used more than 50% of the batteries function. The trial also found that the typical private user had more than enough opportunity throughout their daily routine to keep the battery at full charge.
However, the reality is that fleet users – primarily sales reps – will either complete much longer distances over the course of a day or a higher volume of shorter journeys. With the average full battery recharge coming in it around 2 hours clearly this is not currently a viable option for fleet users – yet.
The ‘Green Energy Company’ Ecotricity is making great strides to facilitate this somewhat sluggish move into the electric market by recently installing its first ‘top-up zone’. In partnership with ‘Welcome Break’ service stations over the next 18 months they hope to install these charge points at all 27 service stations across the country.
For the EV market to gain a place alongside current fleet manufacturer / model incumbents’ vehicle range has to improve – which will only happen through research into battery technology. Secondly, the EV sector has to be on a financial par with its fuel powered competitors for fleet procurement managers to sit up and take note. Considering that it costs around 1p per mile to power an EV compared to 10p per mile in petrol cars, it is easy to see the long term benefits on fleet budgets as well as the environment.
Even though we do expect the EV market to eventually compete with its fuel powered cousins, do not expect it to be a reality for the foreseeable future.
