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SMMT slams diesel BIK tax hike

Dealers can expect a rush of diesel company car buyers before the end of next year to save on benefit-in-kind taxation.

Last week the Chancellor of the Exchequer Gordon Brown’s pre-budget statement announced plans to abolish the 3% diesel surcharge waiver for Euro IV compliant cars registered after January 1, 2006.

The move has been criticised by the Society of Motor Manufacturers and Traders, which says axeing the surcharge waiver in one fell swoop doesn’t make sense.

“We had asked the Government to advise us well in advance of any phase out – and to do it gradually. That way both Government and industry could have avoided market distortions,” says Christopher MacGowan, SMMT chief executive. The SMMT believes dropping the waiver will earn the Treasury an additional £75m.

The Treasury itself says 14 months is sufficient notice and points out that the diesel surcharge waiver will still apply until April 2006, although only cars registered before January 1, 2006 will retain the waiver for the life of the car.

The Chancellor also announced a national roll-out of subsidised employee training programmes, and increased benefits for young people in unwaged training.

“Employee training programmes have been piloted across the country and have proved useful in encouraging the automotive industry’s smaller companies to engage in training for their employees,” says Dr Alan Begg, Automotive Academy chief executive. “Rolling the scheme out across the country will give SMEs the confidence and ability they need to improve their competitiveness by boosting skills.”

A new system of tax returns for small business also drew praise from industry, provided the proposals are implemented.

“Small businesses in the UK have to deal with a myriad of rules and regulations not really intended for businesses at their level, and any simplification would be welcomed, if they do come to pass,” says Matthew Carrington, RMIF chief executive.

Adjustments on fuel duty announced by brown were less popular. Conventional fuel duty is frozen, but duty on low sulphur fuels are not differentiated from conventional fuel. Bioethanol fuels, which are not yet on the retail market, receive a 20 pence per litre reduction in duty.

“It is a shame the Chancellor did not set a duty differential for low sulphur fuels as there will be little inducement for motorists to use them,” says Carrington.

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