LPG and vans are hit hardest in the Budget

FOR VAN DRIVERS AND OWNERS OF LPG vehicles the news from this year's Budget was not good. A six-fold hike in company van tax together with a rise of 2.4p/l for LPG came as a surprise to some.

Company vans have previously only attracted a tax figure of 500 [pounds sterling], which works out to around 100 [pounds sterling] a year for a 22% taxpayer and 200 [pounds sterling] for a 40% taxpayer. This will now leap up to 660 [pounds sterling] and 1400 [pounds sterling] respectively.

There is widespread speculation that the move has been brought in to counter the rise in company drivers opting for double-cab vehicles, which fall into the van category, in a bid to pay less tax. A company car driver can pay as much as 8000 [pounds sterling] a year in tax, so the savings can be quite significant.

According to car ownership provider Provecta this increase in company van tax could see more people opting to switch back to cars because there is less of a financial advantage in driving a van now.

The Chancellor also angered many LPG users by increasing the duty on what has previously been regarded to be an environmentally preferred alternative to other fuels. While petrol and diesel will rise by only 1.9p/l in September along with a rise of 1.4p/l for sulphur-free fuel, the increase in LPG will close the duty gap between the fuels--although at this present rate it would still take 30 to 40 years to catch up.

Jeff Paterson, senior car editor at Glass's Information Services, said that the Budget is unlikely to encourage more people to take up LPG vehicles especially as residual values for LPGs struggle to outperform their petrol and diesel counterparts.

COPYRIGHT 2004 DMG World Media Ltd.
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