How could the autumn statement impact on your fleet?
Published on 06/12/2016
The recent autumn statement announced by the chancellor saw some interesting changes proposed, including a number which will have a significant effect on the motor industry.
The question on the lips of every business owner and fleet manager undoubtedly remains ‘how will this affect my company?’ Fear not though, because here at Neva, we’ve reviewed the Chancellor’s statement, and have picked out the information most likely to impact on the automotive industry. In this blog, we discuss what these changes mean for vehicle owners and users and what measures you can take to ensure your company is compliant.
One of the more pertinent issues in the statement was undoubtedly the mention of changes to the salary sacrifice schemes. While many in the industry were left confused by a lack of clarity in the statement regarding changes to the scheme, it has been announced that the ultra-low emission vehicles will be exempt from the changes made to taxation on salary sacrifice schemes.
In short, from April, employees opting to take salary sacrifice benefit will receive the same tax break as would have been provided through cash income. This is estimated to generate an extra £85m in taxes during the 2017/18 tax year. Tax revenues would then increase during 2018/19 and for the two years that follow by an extra £235m per year.
This is good news for business owners looking to update their fleet while ensuring their business remains considerate, as it means low emission and more environmentally friendly vehicle sales and leases will be the wiser option, it also means sales and leases are subsequently expected to rise come the implementation date.
Another important consideration is how this may impact on the vehicle acquisition options of many businesses, as companies will no longer be able to take advantage of certain rules within the salary sacrifice scheme, making personal leasing a wise option. If you are unsure what type of lease is suitable for your needs, contact a Neva specialist who will be happy to discuss your requirements and advise accordingly.
The decisions made in the autumn statement could also have an impact on business budgets, as the cost of company car tax will rise over the coming years. The good news is that the impact of this can be reduced by ensuring other fleet management costs are being kept to a minimum. Taking out a total care package on your lease can help reduce maintenance costs, and using the services of a fleet management system like our C Fleet app can also help reduce time wastage and costs for all aspects of fleet management.
Arrangements agreed now will be protected from the proposed changes until April 2018, with car arrangements protected until 2021, which means it could actually be advisable to take out a lease sooner rather than later.
While the finance bill will not be announced until December 5th, meaning further clarity on the matter will not be available until this date; April of next year will see the new statement come in to effect. This means business owners need to be organised to ensure compliance with the legislation. Customers who have a lease with Neva Consultants are encouraged to use the expertise of our account management team to assist with all areas of compliance and duty of care related queries.
There is positive news for all road users from the statement, as it was announced that spending on the roads will be up, though this will have an impact on insurance premium tax. A figure of 1.1 billion has been quoted to be invested in work, and a further £220m for pinch-points on major strategic routes. Further to the tax breaks for low emission vehicles, £390 million has also been pledged to help build on the UK’s ‘competitive advantage.’
There’s encouraging news for those interested in new technologies, as changes expected in 2020 to the ‘benefit in kind’ company car tax system will be in favour of electric vehicles. Fully electric cars will be taxed at 2% starting in April 2020. If you are unsure what this means for you and your vehicles, our expert team can discuss the most suitable options for your driving needs.
There is positive news for all drivers in the form of fuel duty however as the chancellor announced this would continue to remain frozen. The current freeze is the longest for 40 years, with this year being the seventh year the freeze has continued. The average car driver is expected to be able to save £150 per year, with the average van driver able to stash away savings of approximately £350 per year. This amounts to tax cuts worth a whopping £850 million, providing road users with a welcome relief, not least because fuel prices have been predicted to rise following the mention of a potential cut in the production of oil. Insurance premium tax is also set to increase by two percent starting in the summer of 2017 and it has been confirmed that there will be a commitment to make regulations tighter, meaning potentially less claims and negating the price increases passed on to drivers.
If you would like to discuss your fleet requirements, or find out how Neva Consultants can help you make the most out of the autumn statement and remain complaint, contact a Neva expert today!