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Spring Statement leaves industry wanting more

Date: 21 March 2018   |   Author: Sean Keywood

A consultation on lower taxes for the cleanest vans should also be extended to cover electric cars, it has been said.

Chancellor of the Exchequer Philip Hammond announced the van consultation during his Spring Statement.

This event was taking place for the first time after the Chancellor moved the Budget, previously held in spring, to the autumn.

The Treasury had previously stated that the Spring Statement would be a low-key affair, with no tax or spending changes, and this was how it transpired; however, the Chancellor did announce a series of consultations on future measures, including the one for vans.

This was generally welcomed by industry figures, but they also felt the Chancellor should have made announcements on electric cars and company car tax rates. 

Reacting to the Spring Statement, James Court, head of policy and external affairs at the Renewable Energy Association, said the scope of the van consultation should be widened.

He said, "The consultation on Vehicle Excise Duty for the cleanest vans should be extended to see how the tax system can better incentivise electric car adoption, which in turn improves the case for domestic electric vehicle (EV) manufacturing. 

"Specifically, Benefit In Kind rates for electric cars should be revised."

Ashley Barnett, head of fleet consultancy at Lex Autolease, called for the government to consider bringing forward tax incentives for ultra-low-emission vehicles (ULEVs), planned for implementation in 2020.

He said, "An increase in the tax incentives for ULEVs ahead of 2020 we believe would be welcomed by fleets. 

"The cost of these vehicles already makes them prohibitive for some from a volume fleet perspective.  

"Fleet decision-makers typically plan in three, five or ten-year cycles, so this really could make a difference to the level of ULEV uptake we're likely to see from fleets in the short and longer terms.

"It could give fleets the encouragement and certainty to commit to a vehicle policy weighted towards ULEVs."

Nexus Vehicle Rental CEO David Brennan, who also welcomed the van announcement, added, "The two previous Budgets included plans for the growth of a national electric vehicle infrastructure and momentum needs to remain with this if we are to accelerate the uptake of EVs."

Brennan went on to say fleets would be disappointed that the Chancellor had not used the Spring Statement to announce future company car tax rates.

He said, "Fleets are still seeking the clarification of company car tax rates for 2021-22 and 2022-23.

"Many fleets will be entering contracts that stretch into these years and urgent clarification is needed to define these rates, which will affect fleet decision-making
and purchasing. 

"In the meantime, this may create opportunities for the rental sector with medium and long-term rental now seen as an attractive stopgap."     

Matthew Walters, head of consultancy and customer data services at LeasePlan UK, expressed similar concerns.

He said, "Many fleets and employees are now entering into 48-month leases that will stretch into 2021-22 and 2022-23, so they need clarity as soon as possible. 

"The Chancellor must not fail to publish these rates in his Autumn Budget - if
not before."

Chris Chandler, principal consultant at Lex Autolease, echoed these concerns.

"Future visibility on company car tax bands is important for fleet decision-makers, because fleets typically plan in three to four year cycles," he said. "It can then be more difficult to make vehicle policy decisions."

Chandler said this was particularly the case at the moment because of the fast pace of change in the regulatory and technological environment.

He added, "The vehicle tax system has to adapt to new technologies and environmental pressures, which means that when changes are announced, they can be pretty significant. 

"If there are no post-2020-21 company car tax bandings announced until the next Autumn Budget, this only gives fleets around two years to factor these changes into their decision-making. 

"In a rapidly changing taxation, environmental and technological landscape, it's never been more important for fleets to have confidence in the future tax landscape."