Budget 2018 – Key Points
The Chancellor of the Exchequer, Phillip Hammond MP, has delivered his Autumn Budget, outlining the Government’s tax and spending priorities for the next twelve months.
The following points of interest were raised:
- A review of the impact of WLTP on Vehicle Excise Duty (VED) and company car tax (CCT), which will be reported on in Spring 2019
- Company vehicles: From 6 April 2019 fuel benefit charges will increase in line with RPI and the van benefit charge will increase in line with CPI
- A freeze in fuel duty for the ninth year in a row
- Alternative fuels: Following review, the government will maintain the difference between alternative and main road fuel duty rates until 2032 to support the de-carbonisation of the UK transport sector, subject to review in 2024
- An extension of the Enhanced Capital Allowance (ECA) for companies investing in electric vehicle charge points to 31 March 2023
- A temporary increase in the Annual Investment Allowance (AIA) to £1 million
- A reduction in the capital allowances special rate from 8% to 6% from financial year 2019/20
- £420 million to local authorities in 2018-19 to tackle potholes and help repair damaged roads
The Government has also responded to the recent consultation on Vehicle Excise Duty (VED) for vans, in which it outlined its key decisions as follows:
- Further develop its understanding of the impacts of WLTP on CO2 emissions for vans, ahead of announcing the new rates and bands, for introduction from April 2021
- Ensure the new system takes into account the weight of the van by introducing a 2-category approach
- Provide ongoing incentives, beyond the first-year, for new zero emission, ultra-low emission and other alternatively fuelled vans from April 2021
The Government is also making available £90m to the Transforming Cities Fund. This will trial new transport modes and services as well as digital payments and ticketing. £20 million of this will be allocated to the West Midlands. The BVRLA and member organisations have been discussing a potential pilot with the government in the last few months.
What’s missing from the Budget announcement?
- No confirmed changes to published CCT tables (subject to the review of WLTP impact outlined above)
- No further update on Optional Remuneration Arrangements (OpRA)
- No changes to the Annual Mileage Authorised Payment (AMAP)
The Budget was a golden opportunity to provide clarity and stability to fleet decision-makers on future company car benefit-in-kind tax rates. This was totally missed by the Chancellor. He also didn’t announce any changes to the bands, despite the new WLTP testing procedure raising the CO2 emissions figures of cars by up to as much as 20%.
Historically, BIK tax bands had been announced for up to four years in advance and the Chancellor’s failure to announce these in yesterday’s Budget will further drive employees to opt for a cash alternative instead of a company car .
We as a environmentally friendly fleet company truly question what has happened to the government’s so called ‘green’ agenda. Recently the government cut the Plug-In Car Grant and in the Budget it has failed to answer a number calls from prominent industry bodies such as ACFO and BVRLA for a U-turn on the decision to increase to 16% benefit-in-kind tax on cars with emissions of 50g/km or below in 2019/20 and bring forward the already announced reduced rates, including the 2% threshold for 100% electric models and those with an electric mileage range of up to 130 miles, to April next year from 2020/21.
Those decisions will only serve to dampen fleets’ enthusiasm for ultra-low and zero emission cars, at least in the short term, at a time when the government says it wants to drive out petrol and diesel engined vehicles from the UK car market.
The BVRLA was dismayed that the Budget included no reference to an early introduction for the 2% company car tax rate for electric vehicles.
Gerry Keaney, chief executive of the BVRLA, said: “The Chancellor chose to ignore the overwhelming voice of fleets, motoring groups, business organisations, environmental groups and MPs – all of whom were united in calling for this simple tax measure to support the electric vehicle market.
“The Government has missed a golden opportunity to incentivise the most important market for electric cars and is in danger of undermining its own Road to Zero strategy. “