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Fleet tax change clarified

The Government has clarified that changes to the capital allowance writing down system announced in the last Budget will not be applied to existing fleet vehicles.

From April 2009, the tax laws for fleet vehicles will be changed to favour vehicles with lower CO2 emissions. Cars producing 160g/kg or more of CO2 will have a writing down allowance of 10%; vehicles producing less than 160g/kg of CO2, will have a 20% allocation.

The Budget did not make it clear if this would apply to cars that are already in fleets, but the Treasury has added a line to the rules making it clear that the tax regime will only apply to newly acquired vehicles.

A spokesman from the leasing and rental industry association BVRLA said: "This is what we expected, but now it is totally clear for employers and fleet providers. Although the change will not be retrospective, this will still bring a massive change from April next year."