Alphabet Leasing UK Briefing: Autumn Budget 2017
Overview
The Autumn Budget contained mixed news for fleets and business car drivers. Diesel vehicles were not hit as hard as some commentators feared, although the brunt of the increases to Vehicle Excise Duty (VED) and company car benefit-in-kind (BIK) from April 2018 will be borne by users of diesel-powered cars. Nevertheless, figures in the Treasury policy papers suggest the Government expects that diesel will continue to command the largest share of new company car sales for years to come.
Ultra-low emission vehicles received support in the form of £200 million of Government money towards a new Charging Investment Infrastructure Fund, plus £100 million to maintain the Plug-In Vehicle Grant until 2020. However, the Chancellor did not take the opportunity to alter the standing company car BIK scales for ULEVs. As they are, they will see the tax on a company EV rise rapidly from 9% this year to 16% in 2019 before falling back to 2% in 2020.
Emissions test cycles played a significant part in the Budget announcement. The Chancellor provided welcome clarification that vehicle CO2 output measurements, obtained from the outgoing NEDC test cycle, will continue to apply for BIK purposes until April 2020, not those from the new WLTP test procedure which will be undertaken for all vehicles from September 2018. But it will be results from Real Driving Emissions (RDE) tests – which are only just beginning to take place, with the RDE2 standard due to come in January 2020 – that will determine which diesel cars escape the higher first-year VED levy and the entire diesel BIK surcharge in future.
Transport continues to be a focus for Government investment. Government capital spending on transport is set to double from £6.5 billion in the current fiscal year to £13 billion in 2020-21, although much of that is earmarked for HS2 rather than roads. Last year’s Budget created a National Infrastructure Commission to coordinate investment in digital and transportation technologies.
The budget, as well as promising regulatory changes to make the UK a friendly environment in which to test self-driving cars, announced an innovation prize for redesigning future road schemes to support autonomous vehicles. The Chancellor also earmarked £1.7 billion for a new Transforming Cities Fund to improve connectivity and support jobs across England’s city regions.
