Autumn Budget 2017: A Fleet Management Perspective
Chancellor Philip Hammond unveiled his second Budget of the year with a raft of measures of interest to fleets that included:
- an eighth successive freeze in fuel duty
- new diesel taxes
- further investment for electric vehicles
- the arrival of autonomous cars by 2021
- changes to Vehicle Excise Duty
Fuel Duty Frozen
The Chancellor announced that fuel duty on petrol and diesel would remain frozen, cancelling the planned rise for the eighth successive year and making the current fuel duty freeze the longest for 40 years.
Since 2010, the Chancellor said, this initiative had saved the average car driver a total of £850 while the average van driver had saved around £2,100 over the same period. The cost to the Exchequer was £46bn since 2010.
New Tax Plans For Diesels
The one new measure that will be perhaps of most concern for fleet operators who run mainly diesel cars is the extra taxation that the Chancellor announced from next April.
In the Spring Budget the Chancellor said that
“the Government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017”.
The outcome of those deliberations are now known. From April 2018, the first year rate for Vehicle Excise Duty for all new diesel cars that do not meet the latest emissions standards will go up by one tax band, while the diesel Benefit-in-Kind surcharge of 3% will be increased to 4% for the same vehicles.
Only cars certified as meeting emissions limits in real driving conditions, known as Real Driving Emissions Step 2 (RDE2) standards, will be exempt from this increase.
These two new initiatives will apply to cars only, and not to vans, lorries or heavy goods vehicles.
The Chancellor said the government was looking to have “fully driverless cars without a safety attendant in the car” on the roads in the UK by 2021.
“Today we step up our support for driverless cars; our future vehicles will be driverless but they’ll be electric first and that’s a change that needs to come as soon as possible for our planet,”
Mr Hammond said.
And he said the industry would be worth £28bn to the UK economy by 2035 and support 27,000 jobs.
The Chancellor announced that another £100m would be available in plug-in grants for electric vehicles, and that there would be a £400m investment to support the growth in electric vehicle recharging infrastructure. There would be a further £40m for charging research and development.
He also announced that, from next April, recharging plug-in EVs in the workplace for private car drivers would not now be seen as a Benefit-in-Kind as it had been previously.
With the aim of encouraging greener vehicles, the Chancellor said the Government would “clarify the law” to ensure those topping up at work did not face a Benefit-in-Kind charge from next year.
Vehicle Excise Duty
The Chancellor had already confirmed changes to the VED system in the Spring Budget, which sees an increase in line with the Retail Prices Index (RPI) for all cars, vans and motorcycles registered before April this year.
However, all cars registered after April now come under the new system and, following the Budget Statement, the new First Year Rate for diesel cars will now go up by one tax band compared to the original scheme.
Under the new rules, there is a higher first year rate for most cars according to their CO2 emissions, including Ultra Low Emission Vehicles, many of which are now subject to VED for the first time.
The highest first year rate is set at £2,000, and hereafter, in subsequent years, there will be three duty bands – zero emission, standard and premium.
For standard cars – which covers 95% of all cars sold in the UK – the charge from April has been a flat rate £140 a year, compared to an average £166 a year that motorists previously paid.