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October 11th, 2007 - Pre-Budget Report 2007 - 9 October 2007

The Report included several key announcements of interest to companies with fleets:

HMRC review of ECO schemes and AMAP's: The Government stated that there will not be a change in the BIK position of ECO schemes (i.e no BIK charge will be due). The review of AMAP's will continue, with a decision expected in the 2008 Budget.

HMRC review of Expensive Car Restriction: The Government published the responses to the Consultation on this area. No decision has been made on the outcome of this review; this is expected in the 2008 Budget.

Free Private Fuel Provision: The fuel benefit charge of £14,400 will increase to £16,900 from April 2008. The figure is used to calculate the BIK payable on free private fuel benefit for company car drivers; calculation being fuel benefit charge x CO2 % rating of car x marginal rate of tax. The increase to £16,900 will therefore increase a driver's BIK liability if they receive free private fuel and also increase the cost to the employer of providing free private fuel, via increased Class 1A NI payable on the driver's BIK.

Lex expects ECO schemes to continue appealing to some types of employers albeit the results of the AMAP review in 2008 may decrease the financial efficiencies of many schemes. Therefore, it would be prudent to review the benefits of ECO versus conventional company car schemes at the time of the AMAP review announcement.

Free fuel taxation changes will result in more employers wanting to remove this benefit due to the high cost of provision in relation to the post-tax benefit received by employees.