Fleets should have a flexible approach to take best advantage of shifts in tax bands; Shorter contract lengths, CO2 caps and alternative fuel vehicles are all viable options. Technology should only be one consideration when future planning.
Ahead of the second ‘stability’ budget statement for 2015, Hitachi Capital Vehicle Solutions is advising fleets from all sectors to remain ‘open-minded’ and flexible to their vehicle solutions. The government has already outlined BIK tax rates through to the 2019/20 tax year which, under current proposals, will see zero-emission vehicles’ Benefit-in-Kind (BIK) rates rise from the current 0% rate to 16% in the next four years. However, an ‘open-minded’ approach to your company car choice lists can allow companies to take advantage of favourable tax rates, especially for low emission vehicles. With taxation changes, it is highly likely that new vehicle’s CO2 emissions will continue to reduce significantly, especially as more alternative fuel vehicles become available. The innovative technology manufacturers continue to bring to the market is increasingly favourable by fleets across the UK, however “utilising new technology should only be the first step,” advises Terry Harvey, Head of Group Tax Hitachi Capital Vehicle Solutions. “Fleets should always be looking ahead and reviewing policies to ensure these are as ‘future proof’ as possible. Four year cycles may now be common but a four year old car can easily become a costly asset for the driver in the form of higher benefit in kind tax, especially as BIK rates rise.
New technology may be a viable option today, saving both the employer and employee money, but taxation systems or newer technology can leave it outdated. At Hitachi Capital, we continuously review fleet policies, looking ahead at legislation and future products ‘beyond the brochure’. “We strongly advise fleet operators to adopt this approach with their supplier. Failing to have the support of a forward thinking and flexible leasing company can be a costly mistake. At Hitachi Capital, we continuously look ahead and have adjusted optimum terms and contract mileages to build the best solution, both now and for the future.
“Flexible contracts may also become more viable options for some fleets for the same reasons, but an open mind to fuel type, CO2 caps, terms and mileages should be considered by fleets regardless of size or sector. Using a vehicle’s Whole Life Cost with this approach and an innovative leasing partner is the best way to get the most from a climbing taxation system” Harvey concluded.