Market Wire, July, 2010
Increased VAT, changes to the capital allowance system and a hike in Insurance Premium Tax (IPT), announced in George Osborne’s recent emergency budget, will have a direct impact on fleet costs, warns leading business insurance retailer, Swinton Commercial.
The rise in VAT from 17.5% to 20%, which kicks in on 4th January next year means fleets that buy their vehicles outright will need to fork out an extra 2.5% in VAT on each vehicle – around GBP 450 extra for an GBP 18,000 car – and will be unable to recover this cost if the vehicles are used for private use as well as company business.
A reduction in capital allowances from 20% to 18% will mean reduced rates for claiming back expenditure on company vehicles and a longer timeframe to recover these business expenses.
The 1% IPT increase also means additional costs for fleets with 6% tax added on top of commercial insurance policies from January 2011.
The good news for fleets was the announcement that there will be no further increase in fuel duty beyond that which was already expected. However, fleets are still facing a 1p rise in October followed by a further 0.76p and the extra VAT in January.
Phil Moss, Commercial Vehicle Manager at Swinton said: “The VAT increase is likely to have a big impact on fleets in terms of vehicle list prices, maintenance and repair costs and fuel prices. Leasing vehicles may become a more attractive option for some businesses, given the VAT recoverability, whereas purchasing a fleet outright means businesses will need to absorb these increases.”
About Swinton:
-- Swinton Commercial is the dedicated commercial insurance division of the
Swinton Group
-- Swinton Commercial was awarded Commercial Lines Broker of the Year 2008
and was a finalist at the British Insurer Awards 2009
-- With 580 branches nationwide Swinton is the UK's largest high street
insurance retailer
-- Unlike many other companies in the financial services industry, Swinton
is committed to keeping its branches open for business, and part of the
community
-- Swinton provides a one-stop-shop for the insurance and related needs of
its clients, offering home, car, caravan, business, holiday, motorbike
and even classic car insurance
-- With a dedicated team on hand at every branch to search a panel of
insurers to offer quality cover at competitive rates
Contacts:
SKV Communications
Anoushka Done, Anna Asamoah or Mairead Rodden
0161 838 7770
www.skvcommunications.co.uk