Budget reaction: No increase to fuel duty but possible future changes to tax

For the eleventh year in a row, fuel duty has been frozen, cumulatively saving the average fleet driver £1,600.

But Chancellor Rishi Sunak hinted fleets might not receive the same good news at the next budget. This year, the government will reconsider how fuel duty works in light of the 2050 net-zero emissions target, so expect further information in the Autumn statement.

More information needed to get fleets greener

The freeze is costing the Treasury £795m for the 2021-22 tax year and there was no mention of future changes to benefit-in-kind company car tax rates, which are due to kick in again on April 1^st after a year’s hiatus.

Since fleet replacement cycles typically last four or five years, this lack of clarity on post-2025 rates and liabilities will do little to give fleet decision makers the confidence they need to switch to greener vehicles now.

Vehicle duty and benefit charges increasing from April 1^st

As part of the Budget, Sunak announced that VED rates for cars, vans and motorcycles will increase in line with retail price index from April 1^st. Likewise, fuel benefit charges and van benefit charges will go up at the start of the next financial year.

But to support post-pandemic recovery in the haulage industry, the Treasury won’t increase VED for HGVs in the forthcoming tax year, and they’ll waive the HGV levy for another year from August.

After a year’s hiatus, BIK payments for company cars will restart on April 1^st, but, so far, rates have only been set out as far as 2025.

No decision on road pricing

Despite hot debate and an open consultation on the potential future of road pricing as a replacement for VED and fuel tax, there was no mention of the subject in the Budget. Instead, consultations will continue and a paper outlining the discussions is due to be published later this month.

More support for British businesses

The Chancellor pledged a further £65 billion in the current and next tax years. The figure takes the UK’s Covid support package for the economy to circa £352 billion; one of the highest support figures in the world.

The furlough scheme has also been extended until the end of September, to help curb unemployment. As a result, forecasts suggest the UK’s economy will expand by 4% this year and return to pre-pandemic levels six months sooner than has previously been feared.

Business rates relief

The retail, hospitality and leisure industries will benefit from business rates relief, with a full suspension of rates between 1^st April 2021 and 30^th June 2021.

Then from 1^st July 2021 to 31^st March 2022, eligible businesses will benefit from 66% rates relief, capped at £2m per business whose properties had to be closed on 5^th January this year.

Ultimately though, we felt there wasn’t a huge amount of detail in the March budget to interest fleet managers!

But what did you think? Do you need more clarity on long-term rates and benefits before making the switch to electric or is now the time to do it? Drop a comment to let us know where your fleet’s at.