A summary of changes

Employee Car Ownership Schemes and AMAP rates

In the additional material published alongside Alistair Darling's speech, it was announced that there would be no Benefit-in-Kind tax applied to ECOS following an HM Revenue & Customs review of the taxable treatment of these schemes. However, the Government has called for further discussions with business to review the current AMAPs in advance of Budget 2008.

Road Pricing, the King Review and Vehicle Excise Duty

The green challenge was addressed through a number of measures:

• Road pricing received a boost, with tentative support for local authorities considering introducing similar schemes to the one seen in London.
• The King Review, published alongside the report, looks to raise the prospect of technological advances, leading to more efficient cars. The next stage of the review will look to suggest specific policies to help encourage their uptake.
• Vehicle Excise Duty rates over the next three years will also "further sharpen the environmental signal to motorists".

Private Fuel

The Chancellor also announced that the figure on which the benefit for free private fuel is calculated will rise from £14,400 to £16,900 from April 2008. Whilst this is in line with the change in the retail price index since 2003, when this system was introduced, it will still increase the tax burden for many drivers.

The Chancellor's stated objective for this is to 'enhance the environmental incentives to drive fewer miles'. This change will force many drivers to review the value of free fuel. For those who choose to relinquish their fuel benefit, greater consideration is likely to be given to the miles they drive.

LeasePlan comment

David Brennan, Managing Director of LeasePlan, the world's largest contract-hire and leasing company, comments, "Generally speaking, this was a fairly neutral Pre-Budget speech which continues to underpin the Government's commitment to green policies. I am, however, pleased but not surprised that the Government has seen fit not to consider Employee Car Ownership Schemes subject to Benefit in Kind.

"Through the King Report, the Government is also looking at ways to improve the awareness and availability of low carbon-cars which can only serve to drive down CO2 emissions further.

"In the responses to the consultation on modernising tax relief for business expenditure on cars, the Government was called upon to apply environmental policies to private cars as well. It’s certainly something to look out for in the future, but as we stand, the company car remains the greenest on the road – the pre-budget report has once again cemented that position."