Ways contractors can combat rising VED and fuel prices in H1 2017

Ways contractors can combat rising VED and fuel prices in H1 2017

11 January 2017

The dawn of the New Year took on a somewhat bum note for business drivers and other motorists thanks to a double whammy of cost increases to swallow, with a headline from the BBC1 reporting that ‘fuel prices hit 18-month high after OPEC production cuts’ and ITV News stating ‘drivers face most expensive petrol prices in two years’. The 24% jump in the price of oil seen from mid-November to the end of December contributed to petrol and diesel prices increasing by over 3p per litre during the festive month.

Some drivers are facing another imminent rise when vehicle excise duty (VED) - or ‘road tax’ as it’s more commonly referred to - is set to change from April 1st onwards. Craig Davy from lease cars specialist Contracthireacar.com explains: “New cars registered on or after 01/04/2017 will be subject to the new VED system whereby even ultra-low emissions vehicles (ULEV) will have to pay a standard road tax rate of £140 from year two onwards. For example, existing Toyota Prius Plug-in Hybrid drivers enjoy zero road tax but anyone leasing or buying a new one from this date will be taxed from the start, albeit just £10 for the first year, and a new Vauxhall Corsa 1.4 Sri ecoFLEX registered from April will see first year tax go from £30 to £160.”

“For contractors who lease their vehicles, it’s worth bearing in mind that business and personal contract hire deals include road tax, which is effectively spread over the contract, so monthly payments increases will be scarcely noticeable in many cases”, he adds.

Vehicles with price tags in excess of £60,000 will be subject to an Additional Rate of £310 per year on top of the standard £140, with all-electric cars and vans even being caught in this net as the government tries to claw back motoring revenue lost in recent years through generous incentives for green vehicles, although fewer contractors will be hit by this penalty.

The FT reports that some motorists ‘pay for bad driving at the petrol pumps’ by braking, accelerating and cornering excessively, which all reduce a vehicle’s fuel efficiency and result in a driver forking out for fuel on a more regular basis. Andrew Brown-Allan from Trak Global Group, the company behind the ‘Appy Fleet’ fremium telematics app and Carrot Insurance, who keep young drivers safer with their telematics solutions, comments: “Accelerating and decelerating smoothly, keeping momentum going as much as possible, choosing the appropriate gear, ridding your vehicle of unnecessary weight and using systems such as air conditioning more sparingly can all have a positive effect on improving fuel economy and reducing pump spend”. The DfT says that reigning in speed can result in a vehicle using 25% less fuel4.

Although hard-working contractors often quite rightly seek to get behind the wheel of the most desirable vehicles they can afford, it also makes sense to be realistic and choose a more efficient car or van that is also cheaper to insure, gentler on consumables such as tyres and more reasonably-priced to service.


1. http://www.bbc.co.uk/news/business-38505980

2. http://www.itv.com/news/2017-01-04/drivers-face-most-expensive-petrol-pr...

3. https://www.ft.com/content/8d6cb564-d362-11e6-9341-7393bb2e1b51

4. http://www.dft.gov.uk/vca/fcb/smarter-driving-tips.asp

Umbrella.co.uk contractors have access to the best car leasing deals available through Vehicle Consulting, so all you need to do is visit their website and make sure you quote ‘Umbrella’ when you contact them.