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Full expensing for leased assets
The chancellor has announced that full expensing will soon apply to leased assets, which will boost vehicle leasing companies.
In the 2023 Autumn Statement, the Chancellor made the tax break permanent for businesses investing in plant and machinery, such as trucks and vans.
According to Treasury estimates, this amounts to a tax cut of over £10 billion per year for businesses investing in the UK.
The forthcoming legislation will extend the tax break to leasing companies for vans and trucks they finance. Whether cars will also be included in the scheme remains uncertain.
Gerry Keaney, chief executive of the BVRLA, said that the decision is a "monumental step forward to rectify an historic injustice".
Frozen fuel duty
Jeremy Hunt also revealed that fuel duty will stay frozen at its current rate for the next 12 months. There will be an extension of the temporary 5p cut on fuel duty that was initially introduced by former Chancellor, Rishi Sunak, at the start of 2022.
At the moment, fuel duty stands at a flat rate of 52.95p per litre for both petrol and diesel, with VAT charged at 20% on both the product price and the duty. The freeze on fuel duty is anticipated to cost the Treasury £5 billion.
The continuation of this policy has been welcomed by the automotive sector, however, many feel that more cuts should have been made to further help motorists at the pumps.
National insurance cut
The Budget included a 2%-point reduction from the 6th of April 2024 in National Insurance Contributions (NICs) for both employed and self-employed individuals.
These reductions are expected to have a positive impact on car salary sacrifice schemes, which enable employees to lease vehicles through their gross income and pay tax on the remainder. By reducing income-related NICs, employees can retain more of their earnings, making car salary sacrifice schemes even more attractive as an employee benefit.
No EV incentives
There were no additional EV incentives announced in the Spring Budget as the government ignored calls to do more to support electric car buyers.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), says that the Budget was a “missed opportunity” for the government to deliver more support on EV development and manufacturing.
"With both Government and industry having statutory requirements to deliver net zero, more still needs to be done to help consumers make the switch.”
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