“In the midst of a cost-of-living crisis, and as we approach a general election year, the Autumn Statement 2023 is highly anticipated and comes at a critical time for the economy. For the automotive sector more specifically, challenging trading conditions remain. Today’s fiscal budget was the Government’s opportunity to outline a clear and strategic vision to support the automotive sector in its transition to net-zero, and it has been an opportunity which has largely been squandered,” said Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA) following the Chancellor, Jeremy Hunt’s, Autumn Budget 2023.
On Wednesday 22 November 2023, Jeremy Hunt unveiled his Autumn Statement to the nation, with the following measures set to impact the automotive retail sector:
Full Expensing and Business Rates
Full Expensing has been made permanent, companies investing in the UK will reduce their tax by up to 25p for every £1 they spend on machinery.
Sue Robinson: “The decision today to make full expensing a permanent measure is one which the NFDA welcomes. The increase in the Corporation tax rate earlier this year, coupled with the rather late announcement of full expensing as a temporary measure, has led to a knock to the UK’s attractiveness as an international investment location. The clarity provided by the Chancellor around the issue is a positive step in helping UK dealers, looking to invest capital in the UK, be it through constructing new sites or purchasing new equipment.”
Business rate relief for retail will also be extended; however, the standard rate multiplier will be uprated in line with CPI inflation. This will increase business rates bills for some, however, large retailers are expected to benefit from tax relief through full expensing.
Sue Robinson: “It is promising that retailers will benefit from a tax relief through full expensing being made permanent, but we are disappointed that the long-awaited business rates reform has been kicked into the long grass once again and these rates are now at the highest level ever for the beginning of a revaluation cycle.”
Apprenticeships and Growth
The government is committing a further £50 million for a 2-year pilot scheme for apprenticeships.
Sue Robinson: “Today’s announcement, and added funding, is a step in the right direction to supporting automotive businesses, stimulating growth for the sector and closing the skills gap. NFDA’s Drive My Career initiative is actively shifting perceptions relating to automotive, educating young people on the promising career paths that automotive has to offer and directly promoting franchised retailers’ apprenticeship and early career opportunities.”
“However, the Chancellor has missed a great opportunity to address the Apprenticeship Levy in his statement today. The current system does not fulfil the potential needs of the automotive industry, especially in the transition to electric. NFDA has urged the Chancellor for the claw-back cap to be removed and for the application process to be simplified.”
National Living Wage
The National Living Wage is set to rise to £11.44 for those 23 and over from April 2024 and the threshold has been extended to include 21- and 22-year-olds for the first time.
Sue Robinson: “Franchised dealerships maintain competitive wage structures, rewarding their staff with regular above-inflation pay increases. Dealerships will continue to invest in their highly skilled staff and the next generation of workers to ensure the best service for customers. Today’s announcement by the Chancellor to increase the National Living Wage for workers aged 21 and over, rising from £10.42 to £11.44 an hour, will have a profound and positive impact on the lives of the workforce in the automotive.”
Corporation Tax
Corporation tax was not mentioned and remains at 25%.
Sue Robinson: “NFDA is disappointed with the decision by the Chancellor not to decrease Corporation Tax. Taxes are currently at a 70-year high, and this is stifling investment into businesses, particularly in automotive, which needs critical support during this transition to electric.
Sue Robinson concluded: “The recent decision by government to delay the banning of new petrol and diesel vehicles has created uncertainty amongst dealers and consumers and, with the Zero-Emission Vehicle Mandate scheduled to be introduced in under five weeks, NFDA is severely disappointed that government has not taken this opportunity to increase the accessibility of electric vehicles and aid the sector in making these greener, cleaner vehicles more affordable.
“While today’s announcements by the Chancellor offer some reason for cautious optimism, it also highlights the necessity for additional efforts by the Government to support the sector. The Chancellor missed the opportunity to provide incentives for prospective EV buyers and to address wider employment concerns within the industry.”
*Article Source www.rmif.co.uk/
