AMONG the good and bad news in the Chancellor’s Autumn Budget was buried a nugget which most people seem to have missed – benefit in kind and the fuel benefit charge on van drivers will be increasing next year.
Company van tax on van drivers has been rather a grey area since it was changed in 2005. In the old days drivers had to pay tax if vans were taken home at night, but at present most drivers don’t pay it as they are now allowed to take their vans home and use them occasionally to pop down to the shops without coughing up.
But those who can use their vehicles at weekends, holidays etc have a £3000 Benefit in Kind (BIK) charge loaded on to their tax bills, which means 20% taxpayers have to pay £600 a year in company van tax. If free fuel is included, another £564 in BIK is added, which increases the tax bill by £112.
From next year Chancellor George Osborne has decided that the BIK rate will rise to £3090 and the fuel charge to £581, which means drivers will pay £618 and £116 respectively. So it’s not forgotten sadly…
Other relevant news from the statement:
From October 2014 van operators will no longer have to show a tax disc as they are being scrapped. The Government says that from that date the paper tax displayed in the windscreen of a vehicle will no longer be issued.
Sadly it’s not the end of VED though.
Abolition of the tax disc has been made possible because of the increasing use of an electronic register of cars, vans and lorries linked to number plate recognition equipment to identify tax dodgers.
The move is aimed at reducing the administration burden and costs by about £7 million. The disc was described in the Autumn Statement as an “administrative inconvenience for millions of motorists”.
The Chancellor has cancelled next year’s planned 1.6p a litre rise in fuel duty which ensures the tax will be frozen for the remainder of the current Parliament.
It is the latest planned fuel duty increase proposed and then axed by the Government and means that duty will have been frozen for almost four-and-a-half years, the longest freeze for more than 20 years.
Fuel duty in real terms is forecast to fall over the course of the current Parliament by 14%. Had the Government implemented pre-2010 plans for the fuel duty escalator, rates would have increased by 7%, it says.