2010 Budget – Impact on Car Leasing

During his recent emergency budget the Chancellor, George Osbourne, announced a number of cost savings and taxes measures, some of which will have a direct impact on purchasing new cars, car leasing and the type of finance and contracts companies enter into. 

The most obvious impact on the motor industry will be the increase in VAT to 20%, commentators are speculating that this will lead to a rise in car leasing as companies who buy their cars will be ineligible for claiming VAT back on the purchase price. You can use the VAT calculator to calculate inclusive or exclusive tax prices.

The new rules on Writing Down Allowances as well will affect the purchase and leasing of cars. This will decrease from 20% to 18% for cars with a CO2 emission rate of 160 g/km or less, and down to 8% for cars with an emission rate over 161g/km.

The fuel duty of 1p and the previously announced 0.76p increase for January 2011 will remain and thereafter the duty will be kept at 1p per litre above inflation until 2014. The government is also looking into fuel price stabilisation and ways in which to ease fuel costs on remote rural areas, with trials due to start in Scotland.

Osbourne also confirmed other measure announced in the previous budget that will have impact on the purchase and leasing of cars. These include the company car and van tax and that the VED changes for heavy goods vehicles based on weight and suspension type, will still commence in April 2011.