How Road Fund Licence changes in April 2017 will effect your contract hire costs

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Two posts in under a week, I know... In the annual budget 2015 the chancellor announced a change in the way Road Fund Licences (RFL) will cost. The changes are huge and shouldn’t be under estimated.

So what’s changing? The current system for calculating RFL charges is being replaced with an entirely new cost structure, for all those cars registered after 1 st April 2017. It is aimed at making the costs fairer for motorists. These are:

A standard rate of £140 will apply to all cars from the second licence onwards, with the exception of zero CO2 emitting cars where the standard rate will be £0.

An additional charge of £310 per year (total costs £450) will apply from the second licence for a period of 5 years for any car with an on the road cost over £40,000. After 5 years the RFL will revert back to the standard rate.

Cars with an on the road price over £40,000 but which emit zero CO2 will still have to pay the £310 additional rate (total costs £450) for a period of 5 years from the second licence, but will revert back to the £0 rate after 5 years.

Alternative Fuel cars will continue to receive a £10 reduction on RFL rates

It is important that those vehicles where the on the road price is higher than £40,000 are aware of the increased in costs. Typically this will increase the monthly lease costs on these vehicles by £20-£30 on a typical contract hire arrangement.

My advice to anyone looking at this today is to consider the vehicles on your company car list and start having the discussion with your leasing provider to understand what communication they are looking to do and how they can support you with activity for your drivers and negotiations with the manufacturers (some discussion on support terms may help reduce this increase).

I hope you find this useful, if you need any other information please do drop me a line and I will be very happy to help. Marcus Puddy: 07801 472 247 or [email]marcus@puddyvsolutions.co.uk[/email].