Rising of fuel price postponed until 2013

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Business Car Manager released the new schedule of the fuel duty rise. Breathe a sigh of relief...for the moment. Fuel duty rise postponed

Duty delayed: The Government has postponed the planned 3p a litre rise for at least six months

Breathe a sigh of relief...for the moment. Fuel duty rise postponed

Good news for hard-pressed small businesses. The Government has announced that the 3p per litre increase in fuel duty scheduled to come into effect in August will be postponed until January 2013.

The lost revenue, put at £500 million by the Treasury, would be paid for by better than expected savings from 'departmental budgets'. For small businesses, there was a collective sigh of relief. Phew!

Making the announcement to Tory cheers and Labour jeers, the Chancellor said that fuel duty would now be 10p per litre lower than it would have been under Labour plans. "We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world," he said.

But what about drivers? Are they making the most of their allowances? And does their business have expenses under control?
Are they using the correct business mileage rates?

If workers use their own car on business, then the tax-free amount they can claim is via AMAPs: Business mileage rates for using a private car or van.
If they drive a company car, then the business mileage rates can be claimed using AFRs: New company car business mileage rates from June.
Is that business controlling fuel expenses?

But it's not all about the correct business mileage rates and cost of fuel. Paul Jackson of TMC has a different angle on the delay and possible ramifications for SMEs with company cars.

"The 2% price rise delay pales into insignificance beside the unnecessary sums that many fleets pay out to drivers in excess fuel and mileage expenses," commented Paul.

"One of our clients has calculated that it has reduced their fuel expenses bill by 20% over the last year by tightening up its expenses process. The company, which has 300 drivers, has recovered an additional £40,000 more from them in respect of fuel used privately since it introduced audited mileage capture."
Why the Chancellor cancelled the fuel duty rise

In last year's autumn statement the Chancellor cancelled a 3p rise scheduled for January this year and said that a 5p rise planned under Labour for this August would go ahead, but reduced to 3p. In the budget the Chancellor insisted the increase would go ahead and this was repeated as recently as last weekend by Transport Secretary Justine Greening.

But the Government had been under pressure to cancel the rise from many of its own back-benchers and otherwise sympathetic media like The Sun newspaper. Labour had tabled an amendment to the Budget which was due to be debated by the Commons next week.

Motoring organizations like the RAC have praised the move as good news for drivers and the country, and John Walker of the Federation of Small Businesses said it was 'excellent news'.

Business Car Manager welcomes the move too. Duty accounts for around 60% of the cost of fuel so in spite of recent falls in oil prices there was always a limit to how far this could go in saving businesses money.

The increase would have put 2.5% on the fuel bill for businesses, putting further pressure on business car finance as well as business costs, and the 45ppm business mileage allowance for drivers using their own cars for business use (AMAPS) would have been under increased pressure.

It will also have disadvantaged company car drivers using the company car business mileage rates.


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Conrad Swailes