Key takeaways for fleet operators from this year’s Budget
The annual Budget announcement is always a keenly anticipated event at the best of times, and this year’s was particularly significant. The ongoing coronavirus pandemic continues to have a major impact on financial planning for fleet operators, so the latest Budget announcement has provided some welcome clarity on how government plans to assist. So now that the Chancellor has officially laid out his plans for the next year, we take a quick look at some of the key takeaways, and how they’ll impact on people looking for the best van deals.
Fuel Duty Frozen For 11th Consecutive Year
In a move likely to be welcomed from almost all parts of the sector, a planned 2p-per-litre hike in fuel duty has been delayed by the Chancellor. This makes it the 11th consecutive year of frozen fuel duty, which the government says has cumulatively saved the average car driver £1600 since 2010.
However, the Chancellor did also take care to say that the government would carefully consider any future freezes against the backdrop of the UK’s commitment to achieve net zero emissions by 2050. In other words, this is probably the last time that fleets can expect a freeze for a while. Future rises in fuel duty will help fund investment in greener alternatives, helping the nation at large make the switch to electric vehicles.
Vehicle Excise Duty (Road Tax) Will Rise
From April 1st, Vehicle Excise Duty will rise slightly for cars, vans and motorcycles, in line with the Retail Price Index inflation rate. That means road tax for a petrol or diesel vehicle that’s been registered on (or after) 1st April 2017 will increase to £155 per year in 2021. Vehicles using alternative fuels like bioethanol or Liquid Petroleum Gas, on the other hand, could cost £145.
Owners of cars with a list price of £40,000 (when new) will now have to pay another £335 per year on top of the standard rate, at least for the first five years that the standard rate is due – that’s generally from the second to the sixth year. There will also be significant rises in the first year rate (often referred to as the showroom tax).
From the 6th of April onwards, there will also be increases in both fuel benefit charges and the van benefit charge.
New Road Pricing Plan Likely To Be In The Works
Given the impending deadline of the 2030 petrol and diesel ban, more and more fleet operators are pushing onwards with their plans to electrify their fleets. That naturally gives rise to the question of how the government is going to fund roads in the long term, given the current exemption of electric cars and vans from vehicle tax.
As an eventual replacement for fuel duty and VED, right now the government is considering a new road pricing scheme with ‘pay as you go taxation’ at its core – essentially, drivers are charged for the number of miles they drive.
Now, although there was no mention of this in the Budget, we did get a small update about a series of consultations that the government plans to launch later this year. In just a short time on March 23rd, it will publish a Command Paper on Tax Policies and Consultations.
This is already being welcomed by fleet owners and operators who want ‘an updated taxation system that accurately reflects the future of mobility’. Industry observers have stressed the importance of having a scheme that is clear, simple and easy to understand, to make it easier for drivers and business owners to seamlessly adapt to the change.
General Tax Rises
It’s no secret that the government was forced to borrow staggering sums of money in order to cope with the harsh financial tolls that lockdowns inflicted on the British population, both personally and professionally. The Chancellor has made it clear that one of his top priorities in the near future is to try and get the economy on a more stable footing for the long term. As part of the drive to do that, the main rate of corporation tax (paid on company profits) will increase from 19% to 25% for firms with profits over £50,000.
In light of the Budget’s release, fleet owners and operators all over the country are now forging ahead with the next stages of their financial planning for the year, and considering their next investments. So if you’re thinking about expanding your fleet with the best new van deals, that’s exactly where we can help here at Van Discount.
We have a huge range of vans to choose from, including commercial vehicles from the likes of Peugeot, Ford and Vauxhall. And best of all, we save buyers an average of 40% off a new van! With our in-house expertise and experience, we can even offer bespoke conversions for our customers. Call our van experts today on 01282 872 530 to see what we can do for you!