Fuel Efficient Fleets to Face Tax Increase

Fleets should prepare themselves for a hike in taxes in the future as the United Kingdom government struggles to maintain their intake in taxes from the industry.  Tax receipts from company car tax have plummeted to £1.25 billion from £1.68 billion over the course of the last seven or eight years, with company vehicles, covering more miles to the gallon and becoming more and more economical. 

"In recent years the manufacturers have delivered a raft of more sustainable vehicles to market, providing better mpg performance and reduced CO2 emissions," notes the director of Arval's Market Insight, Mike Waters.  "This has supported companies, and their drivers, in selecting tax efficient company vehicles that are fit for purpose."

"Looking ahead to the next five years, we expect the UK market to be dominated by fuel efficient vehicles," says the manufacturing leader at Deloitte UK, David Raistrick, who is confident the downward trend will continue. 

Professor Stephen Glaister however, believes that this will mean the government will eventually just come up with new ways to raise extra revenue, noting that the less oil is burnt, the less the government's take from fuel duty will be.  Waters argues that that the government has taken major steps to link environmental performance with fiscal policy in order to encourage drivers and companies to adopt more sustainable behaviours, and that they must now continue to strike a fair balance between taxation and environmental impact.

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