Budget 2020: the key takeaways for fleet decision-makers

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It was Chancellor Rishi Sunak’s first budget, and the first Budget of Boris Johnson’s majority government.

As widely anticipated, his parliamentary address was dominated by the challenges posed by coronavirus – a health crisis that leaves the fleet automotive sector as vulnerable to the seismic economic shockwaves as any other.

Coronavirus is already disrupting the global automotive supply chain, and the prospect of hundreds of fleet drivers self-isolating could cause further significant disruption to the services and supply chains of dozens of other industry sectors.

Extraordinary situations call for extraordinary measures and the Chancellor has responded with a £30 billion stimulus to support the UK economy – in addition to “whatever extra resources” the NHS says it needs.

Our analysts bring you the key highlights that may impact your fleet operations and decisions.

New company car tax rates confirmed

The Chancellor announced:

Company car tax rates, as published in July last year, will be adopted for 2020-21.

This means company cars registered after 6 April 2020 will see a two per cent point tax cut.

Rates will then increase by one per cent for each tax year to April 2023. In the tax year to April 2023, the increase will bring the percentages back to their published rates in existing legislation.

For all zero-emission vehicles, company car drivers will pay no benefit-in-kind (BIK) tax in 2020-21. The percentage rate will then increase to one per cent in 2021/22 and two per cent in 2022/23.

Fleet Operations says:

The fleet industry has been waiting for the new company car rates – announced in the wake of the new WLTP emissions testing regime – to be rubber stamped.

This provides welcome certainty for fleet operators that they will not face an increased tax burden and helps them in terms of cost-planning and procurement.

Record infrastructure funding boost

The Chancellor announced:

More than £600bn for infrastructure projects, including road and rail, by 2025.

As part of this “infrastructure revolution”, more than £27 billion will be invested in England’s Strategic Road Network, and £2.5 billion has been set aside to fund resurfacing works and the repair of 50 million potholes.

The government will publish a National Infrastructure Strategy later in the spring.

Fleet Operations says:

Sustained investment in our road network is vital following decades of underinvestment – and potholes have persistently blighted motorists and fleet operators alike. They are a problem that has reached epidemic proportions, increasing the fleet maintenance cost burden and putting driver safety at risk.

Although it will take time for fleets to benefit from the works that must be carried out, this is a much-needed investment.

Fuel duty to remain frozen

The Chancellor announced:

A freeze on fuel duty for another 12 months. This puts the brakes on a scheduled 2p per litre rise in April.

The chancellor told parliament that he was mindful of the “fiscal cost and the environmental impacts” but had to balance this consideration with the fact that “many working people still rely on their cars”.

Fleet Operations says:

The move to Ultra-Low Emission Vehicles (ULEV) for fleets will take time as businesses – particularly those with large fleets –  get to grips with financing the switch, and while range limitations and charging infrastructure issues continue to be addressed by manufacturers and the government like.

In the short-term, during this transition period, any such moves that help to keep a lid of fuel costs must be welcomed.

All the while, businesses must remain focused on their vehicle purchasing strategies and fuel discount structures to help further control costs.

The future is electric

The Chancellor announced:

A £500 million funding pot to support the rollout of new rapid charging hubs for electric cars. He said that this should ensure drivers are never more than 30 miles away from being able to charge their vehicles.

Vehicle Excise Duty (VED) for zero-emission cars with a list price exceeding £40,000 will be removed from April 2020.

In addition, a further £304 million will be invested in tacking nitrogen dioxide emissions in towns and cities across England.

Fleet Operations says:

The business case for the adoption of ULEVs looks set to become ever more compelling. Improving our charging infrastructure will go a long way to helping build confidence in fleet electrification and will help further accelerate the shift from petrol and diesel.

Cost concerns remain, but businesses have a one-way tick to electric becoming their fleet vehicle powertrain. Decision-makers should consequently keep a close eye on developments and continue reviewing their fuel strategies in a bid to future proof their operations.

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