We were delighted to hear that the chancellor resisted a knee jerk reaction to the VW emissions scandal and whilst the 3% levy on diesel vehicles remains for company car drivers, the feared diesel tax did not materialise and even better, there was no duty rise on fuel.
Quentin Wilson, the lead campaigner for FairFuel UK, former Top Gear host and motor trade commentator, had warned a diesel tax could be announced when Chancellor George Osborne delivered his budget on 25th November. Whilst there was no rise in fuel duty, fiscal watchdog the Office for Budget Responsibility (OBR) says fuel duty rates are likely to rise in line with retail prices index (RPI) inflation from April 2016 onwards – rates having been frozen since March 2011, which will still mean higher prices at the pumps.
Previously, it has been announced the 3% levy on benefit-in-kind (BIK) payments for diesel company car drivers would be lifted in 2016, but the chancellor opted to continue with the supplement until 2021 which is expected to boost the coffers by £1.36 million. Whilst this is unlikely to have any immediate impact on Carvue customers, fleet commentators have aired concerns it could have implications when cars are due to be changed next year as fleet managers and company car drivers may opt for non-diesel vehicles which if it does play out, will slightly change the make-up of the used car market in three or four years’ time.
Private motorists will be helped with the introduction of new legislation to help insurance companies deal with minor collisions resulting in a predicted saving of £40-£50 per year on insurance premiums. The RAC, however, remained sceptical since previous predicted savings had not proved as extensive as first thought whilst the motoring organisation reminds us that it was the recent insurance premium tax rise, from 6% to 9.5%, which has resulted in recent policy price increases.
It’s good news for motorists elsewhere in the budget with a promised £60 billion for transport funding to improve the UK’S infrastructure including road improvements, the electrification of key railway links, the start of HS2 construction and measures to tackle Operation Stack on the M20.
Elsewhere in the Budget announcement…
There are also some announcements which could affect the running of the garage business itself, in particular, business rates and the apprenticeship levy.
The apprenticeship levy has been introduced to help fund apprenticeships with a goal of supporting three million places. Set at 0.5% of an employer’s overall wage bill, it is aimed at large employers and will be paid by those with payroll costs over £3 million, but they will also receive a £15,000 tax-free allowance. Due to start in 2017, the government estimates only 2% of businesses will pay the levy, thus it is unlikely to be an additional cost for small garages with an apprentice (unless your pay and that of your staff exceeds £3 million – in your dreams, right?!), funding for training, though, will be managed differently via an e-voucher system rather than the Skills Funding Agency. Effectively, the apprenticeships levy transfers the cost of training from the government to the private sector and not surprisingly business organisations such as the Institute of Directors have referred to it simply as ‘a payroll tax’.
It came as no surprise that the chancellor confirmed the abolition of uniform business rates which had been announced at the Conservative Party Conference in October. The move will see local authorities keeping all the revenue from business rates as well as the power to reduce them and, in some special cases, raise them via an additional tax on top. The current business rate relief scheme will also be extended for a year.
Businesses will also be expected to set up digital accounts as the tax system is overhauled with the aim of completing processes in 30 days and the government will make savings by closing many of its 170 regional tax offices.
The chancellor also reminded us of his last budget announcement back in July that corporation tax will be reduced to 18% by 2020.