The Government has set out a number of environmental measures in today’s Budget which will impact on company car fleets.

Alison Chapman, head of automotive tax at Deloitte, said:
"The tax relief for company cars will depend on the level of CO2 emissions. 160g/km and 110g/km will become key benchmarks. At the moment 160g/km is the one that will have an impact. There will be a big difference to the cost to the company of a car with emissions of 161g/km compared to one with 160g/km, all other things being equal.”

“As a result I expect a range of cars to no longer have a market within the mainstream company car arena, although it will take time for companies to realise the effect. The question is where the line is drawn. Is it 170g/km, 180 g/km or another number? However, there will still be a place for high emission cars among the ranks of the executives.”

“I understand that there are many cars just under the 120g/km range which will not now meet the 110g/km test.”

“The Vehicle Excise Duty (VED) changes are interesting. In my view, the first year rate of £950 from 2010 is, in itself, still not high enough to influence the purchaser of a new expensive car. However, the second and third hand markets are very different and may be unwilling to pay the standard rate of £455 per year for these cars. As a result the second and third hand resale values may fall dramatically, and that may be the factor that ultimately dissuades a new buyer.”

For further comment from Alison Chapman please call our Budget press hotline: 020 7007 3333.

About Deloitte
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