The Chancellor Philip Hammond announced in last week’s budget that taxation on diesel cars will be reviewed over the summer with revised legislation being announced in the Autumn Budget 2017.
He is quoted as saying “we will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017”.
At this early stage, it is not known if this will be restricted to company car Benefit in Kind or include other taxation for private drivers in the form of Vehicle Excise Duty (VED) increases – or even both.
For UK business, this is effectively a warning shot to expect higher taxation on diesel engine company cars as part of the Government’s plans to improve air quality.
The immediate result of this announcement is that the fleet industry will start reviewing future residual values of diesel cars which will drive up lease rentals through additional depreciation.
Expect this to become into effect as early as next month.
Adding this to the VED increase coming into effect 1st April, uncertainty from Brexit impact and volatile markets 2017 is shaping up to be a year of significant expense escalation; another reason why it is so important to have full transparency and clarity of all fleet costs.
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Article by Sean Bingham