Blogs - Simon Booth

Simon Booth
Managing Director of Astute Motoring Limited

What does the budget mean for fleet operators?

The Chancellor missed a number of opportunities to give the vehicle rental and leasing industry the shot in the arm. While the decision to retain the 3% diesel supplement for the next three years was announced in the 2015 Autumn Statement, the Chancellor has not seen the error of his ways and done a U-turn in this Budget. This punitive tax on company car drivers penalises innocent people for decisions they have already made.

Elsewhere in the Budget, the Chancellor extended 100% first year allowances for businesses purchasing ultra-low emission cars for a further three years until 2021. Sadly, this benefit is not available for companies that lease their cars and therefore it unfairly discriminates against SMEs who rely on lease arrangements to access new low-emission cars, and instead favours cash-rich businesses who can afford to purchase cars outright.

The government says it intends to maintain the attractiveness of salary sacrifice schemes, but only mentions childcare, cycle purchase and pension schemes. We will have to wait for further announcements about cars provided under salary sacrifice schemes – but we fully expect there to be amendments to the system currently available. As well as being tax-positive for the Treasury, the evidence available demonstrates that the majority of recipients of salary sacrifice car schemes are those paying basic rate of tax (i.e. those employees paid less than £31,785). Cancelling or limiting salary sacrifice arrangements for cars as part of an employee package will therefore hit the lowest paid, as well as reducing their opportunity to drive a brand new car rather than an older vehicle, which is unlikely to conform to the same safety and emissions standards. The Government needs to recognise the value of salary sacrifice schemes as a net contributor of tax, as well their benefits in driving important behavioural changes in vehicle emissions and safety standards.

The government’s commitment to launching and supporting the developing technologies in connected and autonomous vehicles looks like it will continue. However, we still believe that further steps are required, such as pushing for a common set of data standards to provide consistency across the emerging market. The government aims on establishing the UK as a global centre of excellence in developing and commercialising the above technologies through the following: Conducting trials in driverless cars on the strategic road network by 2017, Carrying out a consultation aimed at getting rid of unnecessary regulatory barriers to autonomous vehicles being launched on England’s major roads, Establishing a £15M “connected corridor” from London to Dover to enable vehicles to communicate wirelessly with infrastructure and potentially other vehicles.

 As announced at previous Budgets, the government’s Roads Investment Strategy will continue to increase capital investment in the transport network to £61 billion through to 2021. It will shortly launch the second Strategy, determining investment plans for 2021 through to 2024/5. As part of the current RIS, the following projects have been earmarked for funding, Accelerating the upgrade of the M62 to a four-lane smart motorway, Developing east-west road connections, including a new trans-Pennine tunnel under the Peak District, connecting Sheffield and Manchester, plus enhancements to the A66, A69 and the north-west quadrant of the M60, Other critical road projects in the North, including capacity enhancements to the M1 at junctions 35a-39 Rotherham to Wakefield. A further £151M will be allocated to local transport projects throughout the UK, and an additional £50 million to fill potholes around the country.

As announced at Autumn Statement 2015, the government reaffirmed its planned 2% increase in company car tax bands from 2017, alongside its deferral of the planned abolition of the 3 percentage point differential between diesel and petrol cars until April 2021. Both measures have been included in the government’s upcoming Finance Bill, to be presented to Parliament following the Budget. From 2019-20, the Treasury will raise the appropriate percentage of list price subject to tax by 3 percentage points for cars emitting more than 75g CO2 per kilometre up to a maximum of 37%. It will also introduce a 3 percentage point differential between the 0-50 and 51-75g CO2/km, and between the 51-75 and 76-94 gCO2/km bands. The government will also consult on reform of the bands for ultra-low emission vehicles (those under 75g CO2/km) to focus incentives on the cleanest cars, but the continued focus on the cash cow that is company car drivers does look to continue.

Astute Motoring Limited has been recognised as one of the companies to watch in the 2015 business car manager awards. Instead of looking at google ranking or advertising budgets they have relied on service and value as their main factors for growth. Simon Booth The Managing Director commented on receiving the award, “Offering all types of funding and vehicle types is paramount to our growth because not all companies are the same, businesses are facing many challenges at the moment so we need to work alongside them to make sure they get things right and not just try and sell them any vehicle because we have it in stock.”