Search
Toby Poston comments: The most useful thing a Budget can give our sector is a clearer basis on which to make the next investment decision. For members ordering vehicles, setting lease prices or advising customers, knowing what lies ahead has a practical value. Last week’s Budget provided some welcome certainty, particularly on company car tax. Our task now is to make that certainty last longer.
The Benefit in Kind announcement deserves recognition. Within a constrained fiscal environment, the Chancellor has heard the case for keeping electric company cars attractive. We will still see rates steadily increase, but at a slower rate than the two percentage points each year as is currently locked in. The Budget has given businesses and drivers another year on which to base their decisions, even if we would have preferred a longer commitment.
The value of having confidence to make long-term commitments is the argument we have taken to Treasury throughout the year. Our argument is informed by members’ evidence and experience. Budget submissions are an important moment in time, even more important are the conversations that happen either side, and continue to evolve. Explaining how a tax change affects a quotation, an order or a customer’s willingness to choose electric; our role is to make those consequences clear to the people designing the policy.
The same principle applies where the Budget fell short.
Reducing writing-down allowances slows the tax relief available to car fleets, adding cost for businesses that have already committed capital. We’ve seen consecutive years of reductions on the main rate, from 18% two years ago to 12% announced last week. This will hit many members hard and is not in line with the Government’s aim to see growth in every postcode.
The Government needs to consider the combined effect of its decisions on the businesses financing the transition. It remains a priority of ours and we are surveying members to help us build our case further (complete the survey online).
On eVED, sustained engagement has helped secure movement on practical issues, including refunds. For a rental or leasing business, how money is reconciled when a vehicle changes hands is central to whether the system can work. These are precisely the questions members have helped us put before officials.
There is still much to resolve, particularly around credits accumulated during a lease or rental ownership. We will keep working through those details with members and government. Making a bad tax easier to administer does not make it a good tax. eVED remains the wrong tax at the wrong time.
In tandem with the Budget was the outcome of the Cost of Charging review. Progress on charging costs also needs to produce something drivers can recognise in their bills. An affordable electric vehicle proposition depends partly on where someone can charge. The review provides an opening to address that, and we will judge its value by what follows.
For members, our work continues on two fronts: helping businesses understand and prepare for the decisions announced, while challenging the costs and uncertainty that remain. Please keep sharing the examples that show where policy works and where it breaks down. They give our discussions with government their substance.
We will press for the next year of BiK certainty, pursue fairer capital allowances and keep testing eVED against fleet operations. The Chancellor has recognised some of what our sector needs. The next test is whether government can provide conditions in which members can confidently keep investing.
