Government under pressure on vehicle excise and fuel duties

The government has indicated it may retreat from its plans to increase fuel duties and change rates for vehicle excise duty on motorists, following pressure form rebel MPs.

It has been reported that chancellor Alistair Darling’s team said he was listening carefully to MPs and others who have spoken out against government plans to increase fuel duties by 2p and implement new vehicle excise duty (VED) rates and bandings that penalise drivers of gas-guzzling cars.

Alastair Kendrick, partner of Bourne Business Consultancy said an increase in fuel duties combined with the reforms made to vehicle excise duty and the changes to capital allowances will hit employers hard. Employers who offer a company car to employees as part of their contract as will have to foot the bill for the increased charges. Kendrick also said employees who use their own personal car for work may think it’s unfair that they have to find the money to cover the rises in duties.

Kendrick said: “This is a real issue and reinforces that companies have got to look again at their company car policy.”