Helping you understand the changes to vehicle corporation tax

From 1st April 2009, important changes are being made to the tax treatment of cars which will impact all organisations that buy, own or lease cars. These changes are the most significant changes to the tax treatment of vehicles since the company car tax was linked to emissions in 2002.

The new rules will make it more tax efficient to buy or lease a company vehicle that emits 160g per kilometre of CO2 or less, and more expensive to buy or lease one that emits 161g/km or more.

Current rules

Under the current rules, corporation tax for business cars is divided into three main parts:

• Cars with emissions of 110 g/km CO2 or less attract a 100% first-year writing down allowance (regardless of vehicle cost).
• Cars which cost less than £12,000 are put in a pool and attract a writing down allowance of 20% on a reducing balance basis subject to a maximum of £3,000 per annum.
• Cars costing more than £12,000 are deemed to be "expensive cars". A separate calculation is performed for expensive cars on a vehicle by vehicle basis and the writing down allowance is subject to the maximum of £3,000 per annum.
• Lease rental restriction - current rules

For expensive cars, a proportion of the finance cost is disallowed in the corporation tax calculation. The proportion disallowed is on a sliding scale dependent on the cost of the car, rising from zero at £12,000 to over 30% for cars costing over £30,000.

Lease rental restriction – new rules

The proportion of the finance cost disallowable for corporation tax will also move to being emissions based.

There will be no restriction for cars up to and including 160 g/km CO2 but for vehicles emitting 161 g/km CO2 or more there will be a flat rate restriction of 15% on the finance part of the rental. This will reduce the after tax cost of vehicles emitting over 161 g/km CO2 and costing in excess of £20,000 when compared to the current rules.

New rules

Under the new tax regime, the cost of the car will not determine the taxation treatment; instead it will move to an emissions based system. The corporation tax rules are again divided into three main parts:

• Cars emitting 110 g/km CO2 or less will continue to receive a 100% first year allowance. This will remain in place until 2013.
• Cars emitting more than 110 g/km CO2 and below 161g/km CO2 will receive a 20% writing down allowance on a reducing balance basis.
• Cars emitting 161g/km CO2 or more will receive a 10% writing down allowance on a reducing balance basis.

The new regime will increase the amount of tax paid in the early years and therefore will increase the operating cost of cars emitting 161 g/km CO2 or more, whether leased or purchased outright. The maximum writing down allowance of £3,000 per annum has been removed.

CO2 emission output of vehicle110g/km CO2 or less 111 to 160g/km CO2 161g/km CO2 or greater.

Why are things changing?
The changes are due to the government's targets to lower CO2 emissions and to encourage consumers and businesses into more environmentally-friendly and fuel efficient vehicles. The Chancellor of the Exchequer, Alistair Darling, has set the agenda to encourage businesses to own and use cars emitting the least amount of CO2 by linking the writing down allowance to the CO2 rating of the vehicle.

Car manufacturers have also been set a target of reducing average emissions of new cars to 130g/km by 2012.

The changes aim to simplify the administration process for fleets and reduce fuel and tax bills by encouraging switching to lower emission vehicles.

Cars registered before 1st April 2009

The new corporation tax rules will be applied to all new business delivered from 1st April 2009. The government has yet to confirm how it will affect vehicles acquired before this date, though it is hoped these will be dealt with under the existing regime.

What about vans?

The changes announced are for cars only. Vans and commercial vehicles delivered after 1st April 2009 will continue to attract a 20% writing down allowance on a reducing balance basis.

Advice

Regardless of how many cars you run, now is the time to review your business car strategy to ensure that you can take full advantage of the new tax regime when it arrives on 1st April 2009.

Currently, as cars become more expensive the relative benefits of leasing are reduced by the impact of the lease rental restriction. Under the new system, cars emitting 160g/km CO2 or less are likely to be cheaper to lease for many businesses. Cars emitting 161g/km CO2 or more will become more expensive to own, regardless of the method of funding. With this in mind, drivers are advised to review their car policies with immediate effect, examining the pre and post tax cost of their vehicles.

Clearly, two identically priced cars may cost the same to lease or purchase, but, depending on emissions they could have a dramatically different after-tax cost, particularly as the corporation tax regime is now dependent on CO2 outputs. Vehicle Excise Duty (VED) and the scale charge used for Benefit in Kind (BIK) tax and computing National Insurance contribution calculations have been CO2 based for some years. Fleet managers are encouraged to review their existing fleet to see which cars costing more than £12K (expensive cars) would fair more favourably under the new regime.

Fire Statistics Monitor : Update to 31 March 2008

The Department for Communities and Local Government (DCLG) has published details of the latest fire statistics for the UK as a whole, covering the 12-month period up to 31 March 2008. The 'Fire Statistics Monitor' is published quarterly and comprises figures taken from reports submitted to the DCLG on fires and false fire alarms attended by the fire and rescue service across the UK. In particular it describes detailed information on what is known as 'primary' fires - these are defined as fires that have taken place in buildings, vehicles and outdoor structures, as well as any fires involving casualties, rescues or fires attended by five or more appliances.

Some information, albeit less detailed aggregated information is provided on "secondary" fires - these are the majority of outdoor fires including grassland and refuse fires unless they involve casualties or rescues, property loss or five or more appliances attended. Fires in single derelict buildings are regarded as secondary fires. Chimney fires are any fires occurring in occupied buildings where the fire was confined within the chimney structure (and did not involve casualties or rescues or attendance by five or more appliances).

Death of individuals attributed to a fire is counted as a fatality even if death occurred at some point after the event and even if fire was not the cause of death. Information on fatalities included in the Fire Statistics Monitor is provisional, since it is subject to rigorous cross-checking against the cause of death detailed on the death certificates. The main area of uncertainty is whether the fire was the cause of death in road traffic fatalities.

The information detailed in the latest Fire Statistics Monitor can be summarised as follows:

• The past 12 months have seen an 8% decrease, compared to 2007/2008 figures - in 2008/2009 the United Kingdom Fire and Rescue Services attended 799,000 fire and false alarm incidents;
• Total UK fires were recorded as totalling 382,000 - an 11% fall since 1988
• UK fire deaths increase by 8% to 500. This figure is contrary to the long-term downward trend;
• Primary fires fell to 141,000 in 2008/2009 (a 10% decrease). Within this figure, dwelling fires are at their lowest since 1977 (52,000, down 5%), fires in other buildings - including workplaces and areas where people gather - are down by 11% to 30,000 and road vehicle fires again fell (by 14 & to 49,000) to their lowest total since 1989;
• It is reported that secondary fires fell to 231,000 (a 12% decrease);
• False alarm attendances fell by 5% to 417,000. This included a 13% fall (to 29,000) in malicious false alarms and a 5% fall (to 270,000) in false alarms due to apparatus.

HSE Warning over Asbestos Removal during Demolition

The Health and Safety Executive (HSE) has warned contractors about employing licensed asbestos companies and carrying out suitable asbestos checks before starting demolition works.

This follows the prosecution of an Uxbridge-based construction company, Waite Construction Ltd, who pleaded guilty to contraventions of Regulation 8(1) of the Control of Asbestos Regulations 2006 and Section 2(1) of the Health and Safety at Work etc Act 1974 at the City of London Magistrates' Court.

A complaint made in November 2006 led to HSE inspectors visiting a site in Hackney where it was said workers were removing asbestos with no protection for themselves or others in the area. Inspectors also discovered that pipes clad with asbestos had been removed and cut, even though local authority officers had advised that work be brought to a halt.

After a Prohibition Notice and a 'Notice to Leave Undisturbed' (referring to articles within a skip) were served; the company arranged for licensed asbestos removal.

The company was fined £15,000, with costs of £26,488.

Father and Son Pay Out over £50,000 for Fire Safety Breaches

In a prosecution brought by the Hereford & Worcester Fire and Rescue Authority, Brian Murdoch and his son David, were ordered to pay more than £50,000 in fines and costs after admitting to charges relating to inadequate fire safety standards.

Brian Murdoch owns property at 90 and 91 Coventry Street, Kidderminster, and his son is responsible for the day-to-day operation of the premises. In July 2007, tenants had to be rescued from those premises following a fire.

At Kidderminster Magistrates’ Court, Brian and David Murdoch pleaded guilty to various breaches of The Regulatory Reform (Fire Safety) Order 2005. The Fire Safety Order places an obligation upon premises owners/occupiers/employers to carry out a suitable and sufficient assessment of the risks to their premises from fire. It applies to virtually all premises, with a few exceptions which include single occupancy domestic properties.

The charges against the Murdochs included:

• failing to carry out a suitable and sufficient assessment of the risks
• failing to ensure that the premises and relevant equipment and devices were properly maintained and in good working order
• failing to comply with the Fire Safety Order, so far as was required.

Father and son were fined a total of £11,600 and were required to pay costs amounting to £39,695.

Attention was drawn to the effectiveness and efficiency of the Fire Service during the incident in question. Assistant Chief Fire Officer, Jon Hall, expressed the hope that the case would act as a timely reminder to people throughout Herefordshire and Worcestershire to ensure their buildings are safe. He added that the Fire Authority would use enforcement action and, ultimately, prosecution in situations where building owners/operators fail to fulfil their legal obligations to those that use their buildings.

Watch your STEP – Slips and Trips e-Learning package

What is the STEP tool?
STEP is an eLearning package developed by the HSE, providing slips and trips guidance through interactive learning.

It is an easy way to learn about slips and trips, how they are caused, why preventing them is important and how to tackle them. STEP includes quizzes, videos, animations, case studies and interactive sequences to enhance the learning experience.

Completing this package will aid understanding of slips and trips, but to reduce accidents you will also need to take action in your workplace.

What industries will it suit?
The general course is suitable for many different industries. The four other courses have been specifically designed for Food Manufacturing, Hospitality & Catering, Education and the Health Services.

Who can use it?
Anyone: workers, supervisors, managers, safety representatives, small businesses, health and safety professionals, health and safety trainers, architects, designers and so on. This is because it contains three levels of information:

1. Introductory – 15- 20mins - A short, snappy course, provides key information in an easy to understand, interactive format.
2. Intermediate – 1 hour - Contains several short lessons in simple English on key topics including footwear, flooring and assessing slip and trip risk. This level does not have to be completed in one session; you can dip in and out. It includes cascade materials suitable for group training sessions.
3. Advanced – Contains a number of detailed lessons, several of a technical nature e.g. classification of flooring, procurement of footwear, test methods. If fully completed will provide in depth knowledge, alternatively you can dip in and out to learn about specific topics.
   

Why should I use it?
When tackling slips and trips it is not always easy to know where to start or what the key issues are, STEP can help. This package provides practical guidance and learning that will, if put into practice, help you to successfully tackle slips and trips in your workplace. It also contains all you need to train others.

How do I access it?
STEP is a free to use online tool. It sits on the HSE website. STEP is also available on DVD via HSE books; there is a small charge for this of £5.00 plus VAT.

Start the STEP tool

Will it help me solve all my slip and trip problems?
If you have a particular slips or trips problem in your workplace, you should contact HSE infoline or visit the HSE slips and trips web pages.

How does it relate to other slips and trips guidance, tools and SAT?
STEP replaces priced publications HSG 155 Slips and Trips: Guidance for employers on identifying hazards and controlling risks and HSG 156 Slips and trips: Guidance for the food processing industry, which are now out of print. It presents the information contained with slips and trips guidance documents in a different way and makes reference to and complements SAT, the slip and trip mapping tool, the hazard spotting tool, the stop slips in kitchens pack and CIRIA: Safer surfaces to walk on – Reducing the risk of slipping.

Why produce an online tool not a publication?
Unlike published guidance, it can be updated quickly, ensuring that HSE constantly provide up to date and relevant slip and trip guidance.

How long does it take to complete?
The introductory level will take about 15-20 minutes and the intermediate just over an hour. The advanced level contains very detailed information and as such is designed to be dipped in and out of rather than completed in one session.

Can I use it to train others?
Yes. You can either let people work through the selected level or alternatively, you can use the cascade presentations to train several people in one go.

Company Discovers the Cost of Slips, Trips and Falls

Following a prosecution case in which the company responsible for a driver breaking his ankle was fined £5,600, the Health and Safety Executive (HSE) is warning firms that slips and falls can be costly.

At Coventry Magistrates' Court, Sunlight Services Group, who are based at Basingstoke, was fined £2,400 after pleading guilty to a breach of regulation 12(1) of the Workplace (Health, Safety & Welfare) Regulations 1992. The company also pleaded guilty to breaching regulation 3(1) of the Management of Health & Safety at Work Regulations 1999. For this offence, the firm was fined £3,200. It was also ordered to pay costs amounting to £8,951.

The case concerned a driver at the company’s London Road depot. On 20 November 2007, he had parked his vehicle next to the locked pump prior to filling it up with diesel fuel.

Unfortunately, he slipped on the wooden decking in front of the pump and broke his ankle. After falling, he was stranded for 20 minutes, but eventually managed to use his mobile phone to call his wife. She then telephoned for an ambulance.

The driver, an agency worker, had been working with the company for just two weeks. He took only two steps on the decking before falling. Upon arrival, the paramedics also found the surface very slippery and had to remove some of the decking before they could they could lift the casualty into the ambulance. This was not the first time drivers had slipped in the area - the pump had a small leak when not in use - but it was the first time such a fall had resulted in injuries.

At Coventry Magistrates' Court, the charges concerned the company's failure to carry out a suitable and sufficient risk assessment of the wooden decking next to the diesel pump and ensure that every floor surface in the workplace was suitable for its intended purpose and not slippery. It also failed to protect workers using the pump.

The Court's ruling on this case coincides with the Health and Safety Executive's (HSE's) launch of phase two of its 'Shattered Lives' campaign, which aims to draw attention to the potentially fatal consequences of slips, trips and falls in the workplace.

Speaking after the case, HSE inspector Pamela Folsom made the point that, in this instance, the dangers could have been identified easily through even a basic risk assessment. An alternative type of flooring could then have been installed. Wooden decking was an inappropriate flooring material for an area subject to fuel spillage and a variety of weather conditions.

Stress at Work – New HSE Website

The Health and Safety Executive has created a new website that aims to help businesses in preventing work-related stress.

The website will include the following:

• advice;
• guidance;
• self-assessment questionnaire for line managers;
• case studies;
• practical examples.

The website’s main focus will be concerning management standards for work-related stress that have already proved successful.

Stress is a major cause of occupational ill health which can result in absence, high staff turnover and poor performance of organisations.

Peter Brown, Head of the HSE Health and Work Division said: "Pressure is part and parcel of all work and helps to keep us motivated, but excessive pressure can lead to stress which undermines performance, is costly to employers and can make people ill.

"This new website will enable employers to easily access all the information they need to help prevent stress in their workplace.

The website can be accessed at: http://www.hse.gov.uk/stress