The Budget 2017: What You Need to Know
What does Chancellor Philip Hammond’s budget mean for you, your fleet and the wider fleet automotive industry?
Below we’ve summarised the key points that may impact you.
Fuel duty
The news: Fuel duty for 2018/19 has been frozen.
Action stations: Fleet operators should still be reviewing their long-term fuel strategies as the Chancellor gives with one hand but takes with the other.
As the government strives to crackdown on air pollution, other measures that will impact fuel costs were announced. Read on!
Company car tax
The news: The fight to crackdown on air pollution, as expected, has been taken to diesel motorists. The Chancellor revealed that the diesel car supplement in company car tax will increase by one percentage point. This will mean the benefit-in-kind supplement will rise from 3% to 4% from April 2018.
The Chancellor pointed out in Parliament that this will only affect cars
“No white van man (or woman) will be hit by these measures”
Affected car fleet drivers, however, will now face an additional benefit-in-kind liability while employers will carry additional Class 1A national insurance contributions.
Action stations: This latest move serves to reignite the diesel-versus-petrol debate for car fleet operators. To avoid fleet costs escalating further, organisations will need to review their car policies and reconsider their car choice lists.
Vehicle Excise Duty and BiK
The news: From April 2018 the first year Vehicle Excise Duty (VED) rate for diesel cars that don’t meet the latest (RDE2) standards, will go up by one band.
Next generation cleaner diesels will not face tax increases and it will also only apply to new diesel cars, so existing owners will avoid being penalised.
This levy will fund a new £220million Clean Air Fund to support the implementation of local air quality plans.
VED rates for cars, vans and motorcycles registered before April 2017 will increase in line with RPI. The Fuel Benefit Charge and the Van Benefit Charge will also increase in line with RPI. The chancellor unveils extra funds and tax incentives for electric car drivers.
Action stations: Once again, a prudent fleet and vehicle replacement policy is called for that takes account of high tax implications for some diesel vehicles
Electric vehicles
The news: “Our future vehicles will be driverless, but they’ll be electric first,” Chancellor Philip Hammond proclaimed.
He has allocated £540 million to support the growth of electric vehicles with £400 million of this going into a new charging infrastructure fund. A further £100 million will be spent on plug-in-car grants, and £40 million has been pledged to research into charging.
Interestingly, electric vehicles charged at work will not incur benefit in kind tax.
Action stations: The move will help drive take-up of electric vehicles and see them gradually becoming a viable alternative to petrol and diesel.
Businesses should watch this space and keep a close eye on developments in the EV market. As the clock ticks, the commercial viability for EVs as part of a business fleet will become increasingly compelling.