What does the 2018 Budget mean for you?
An ‘at a glance’ summary for fleet operators…
The Autumn Statement had been widely anticipated to be the most significant in recent times for the fleet sector. It wasn’t as far-reaching as many had expected, however – and as some had hoped.
But what does Chancellor Philip Hammond’s Budget mean for you, your fleet and the wider fleet automotive industry?
In the wake of his speech to parliament, we have summarised the key points that may impact you – along with any important steps you should consider taking.
What you should know: Fuel duty for 2019/20 has been frozen.
According to the Chancellor, the move, which sees fuel duty now frozen for the ninth consecutive year, will take the savings to the average car driver and van driver over this period to £1,000 and £2,500 respectively.
What you should do: With a target of reducing greenhouse gas emissions by at least 80 per cent by 2050, relative to 1990 levels, the government will continue its drive to encourage the take-up of Ultra-Low Emission Vehicles (ULEV).
So, despite this freeze – and against a backdrop of fuel costs recently hitting a four-year high – businesses should keep a close eye on their fuel strategies.
Smart buying strategies and fuel discount structures can help in controlling costs in the short term, while the business case for ULEV vehicles over the mid and longer-term will become ever more compelling.
Company car tax
What you should know: The Chancellor told parliament that the impact of WLTP on Vehicle Excise Duty and company car tax will be reviewed in the spring.
The issue is clearly on the government’s radar, with an appreciation that consideration must be given to adjusting tax thresholds to take account of potentially higher CO2 figures under the new emissions testing regime.
In recent times, the availability of rates over the next five years has proved invaluable to financial planning. The onus is now, consequently, on manufacturers to report revised WLTP data as soon as possible – this will enable government to put its future tax plans in place.
What you should do: From now until spring 2019, cost projections for businesses – and employees – must be based on the financial planning data that is available for the next two and a half years.
During this time, you should look to keep a close eye on developments, including the timetables for new models, and ensure vehicle choice lists are reviewed regularly and updated accordingly.
Furthermore, drivers should be kept up-to-speed on what is happening, so they are better placed to make informed decisions.
Vehicle Excise Duty
What you should know: Vehicle Excise Duty (VED) for cars, vans and motorcycles will increase in line with Retail Price Index (RPI).
VED for Heavy Goods Vehicles (HGVs), however, will be frozen in the next financial year in a bid to help support the road haulage sector.
The government is also set to publish, very soon, a summary of responses from its consultation on VED reform for vans, published in May 2018, along with proposals to introduce environmental incentives from April 2021.
What you should do: Budget for the small increase in VED for cars and vans from April 2019.
The postponement of an emissions-based regime for van VED is a welcome one, giving van fleet operators breathing space while van manufacturers improve availability and options for low-emission LCVs.
Van benefit charge and fuel benefit charges
What you should know: The van benefit charge will increase in line with the Consumer Price Index (CPI) and the car and van fuel benefit charge will increase in line with the RPI.
What you should do: From a budgeting perspective, you and your employees will need to be aware that from April 2019:
- the flat-rate van benefit charge will increase to £3,430
- the flat-rate van fuel benefit charge will increase to £655
- the car fuel benefit charge multiplier will increase to £24,100
Electric charge points
What you should know: The first-year corporation and income tax allowance for expenditure on electric charge points has been extended to 2023.
What you should do: The move should help to support the business case for adoption of electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs). When installing charge points at your workplace, remember that the cost can be deducted from the company’s pre-tax profits each year.
What you should know: A total of £90 million will be allocated from the existing National Productivity Investment Fund to help create Future Mobility Zones. This will enable new modes of transport to be trialled, along with digital payments, ticketing and other services.
What you should do: Businesses should keep a close eye on developments in future mobility and look to establish mobility strategies. With the expansion of Low Emission Zones (LEZs), particular focus should be given to city centre zones, with policies determining who should travel where, when and how.
Such strategies may include utilisation of initiatives such as electric car clubs and the introduction of new, emerging, connected technologies that may help to future-proof business operations.
Road network investment
What you should know: The Chancellor has also committed £25.3 billion to England’s Strategic Road Network – motorways, trunk and A roads. This investment, funded from vehicle excise duty, represents a 40 per cent increase in the Highways England budget.
In the forthcoming financial year, he has also pledged £420 million to local councils to help repair potholes, bridges and for other works.
Roads in poor state of repair can add a significant cost to fleet vehicle maintenance bills. This is a much needed and welcome investment.