An announcement on extended company car Benefit-in-Kind (BiK) taxation tables should be “among the first fleet jobs” for the new government, says the Association of Fleet Professionals (AFP).
The industry body said it’s now nearly two years since the current tables were announced and they only run until the 2027/28 tax year, meaning fleets buying vehicles today don’t know the tax rate their drivers will be charged towards the end of the decade.
Paul Hollick, APF chair, explained that the rise of electric company cars on fleets meant businesses had started operating longer replacement cycles to help offset their higher purchase cost, rising from typically three years to four or five.
“This means that we need the Benefit-in-Kind to extend longer into the future than was previously the norm. Our AFP Tax and Regulation Manifesto launched two weeks ago and one of its key demands is to see company car tax settled at least until the 2029/30 tax year. Clear, positive signalling is needed from the Government to instil confidence for fleets buying future vehicles.
“In our view, this should be among the first fleet jobs for the incoming government, whoever that turns out to be, otherwise fleets are buying ‘blind’ without being able to tell drivers what BiK tax they will be paying in the future. That’s simply unfair.”
The incoming Chancellor is expected to create a Budget or Fiscal Statement within the first couple of months – and the AFP is calling for the new tables to be announced at that point.
“It’s an easy task and would create a much higher degree of certainty,” Hollick stressed.
He added that the AFP broadly accepted that Benefit-in-Kind rates on electric company cars would increase over time as they became widespread on fleets – but that it was important to maintain an incremental approach to support widespread fleet electrification.
“Benefit-in-Kind taxation on electric company cars has been rising at about 1% every year and we believe that increases higher than this could easily prove counterproductive. While electric power has become almost the norm for many operators, it is largely the low hanging fruit that has been picked and we’re entering a more difficult phase.
“We’re now working our way through these trickier applications, notably where drivers don’t have charging available at their home or nearby, something that won’t be resolved properly until on-street charging infrastructure becomes widespread across the country. For these employees, low Benefit-in-Kind taxation is an important incentive to offset inconvenience.
“Also, as has been widely discussed, adoption of electric vans is proving much more difficult than for cars, and zero Benefit-in-Kind taxation for those van drivers should be maintained as long as possible in our opinion, alongside continuing exemption from road tax.”
The AFP Tax & Regulation Manifesto 2024 can be downloaded from here.
