Budget 2021 - What it means for fleets
(Posted on 22/03/21)
Concerns that Rishi Sunak would use the 2021 budget to target motorists were unfounded and many business owners have praised the Chancellor and welcomed support for the fleet industry.
Motorists expected an increase in fuel duty but will now wait until the Autumn Statement for clarification on transport policies.
A freeze on fuel duty for the 11th consecutive year provides relief to many fleets.
The Chancellor announced a new ‘super deduction’. A 130% discount tax relief on capital allowance.
The tax relief is for investment in new equipment and machinery. From 1 April 2021 to March 2023, companies can claim 130% capital allowances on qualifying plant and machinery investments.
Mike Hawes, chief executive at the Society of Motor Manufacturers and Traders (SMMT) remains cautious until more details are released.
He said: “Measures to support investment and upskilling are of vital importance to the sector but more is needed if the government’s green recovery plan is to be a success. Ensuring the UK has the most competitive environment globally for business investment is essential so, whilst we welcome in principle the announcement of a ‘super deduction’ for investment, it is not clear if it will work for manufacturing and plant and machinery, so we now seek the fine detail and, ultimately, business rates reform to encourage investment.”
Sunak mentioned little about the long-term future of Benefit-In-Kind.
We do know that benefit in Kind rates will change next month. From April the rate for zero-emissions cars will increase to 1%, then to 2% in 2022. BIK rates from 2022 will be frozen for the following three tax years. (2022-23, 2023-24 and 2024-25).
The government deducted two percentage points of BIK off the rates used for older, NEDC-assessed cars last April.
This will reduce further to 1% in 2021/22 and will disappear in 2022. If a WLTP vehicle has higher on-paper CO2 emissions than an NEDC-tested car, there will be no reduction in BIK from April 2022.
Van fleets will also see changes from this April. The government wants to incentivise the uptake of zero emission vans. Employers who provide a company van, which is available for private use will have a zero-rate benefit charge if the vehicle has zero emissions.
An increase in corporation tax from 19% to 25% planned for 2023 will go ahead. The Chancellor aims to repay some of the £355 billion the government borrowed during the pandemic.
The Treasury will increase the tax on a sliding basis. Businesses with profits of less than £50,000 will continue to pay the 19% corporation tax rate. Those with profits of more than £50,000 will see an increase. The full 25% rate will only apply to businesses with profits of more than £250,000.
Gerry Keaney, chief executive at the BVRLA said: “The Chancellor has provided support and incentives where they are needed most.
“Today’s announcement will help BVRLA members and their customers to bounce-back from the economic impacts of the COVID pandemic and focus on decarbonising their fleets.
“Motoring tax updates were limited to a further 12-month suspension of the HGV Levy, freezes in fuel duty and HGV Vehicle Excise Duty (VED) and inflation-linked increases in car and van VED and the fuel and van benefit charges.
“We are disappointed that the Government has given no further indication of the longer-term motoring tax roadmap it will use to drive decarbonisation, but there is lots of consultation going on and we expect more news on this in the coming months.”
We provide the most efficient vehicles possible with a range of fleet management services. We focus on whole life costs to achieve the best possible deal for your vehicle(s). We have offers on electric and hybrid vehicles.
For more information on the budget or fleet management contact us:
Call 0800 0321 433
Social Facebook Twitter LinkedIn
Speak to one
of the team
If you’re looking to discuss your vehicle leasing further, speak to one of our specialist advisors today!