Error parsing XSLT file: \xslt\FacebookOpenGraph.xslt Autumn Statement: News and industry reaction
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Autumn Statement: News and industry reaction

Date: 23 November 2016

The Chancellor of the Exchequer used his Autumn Statement to confirm plans for a clamp down on salary sacrifice schemes but company cars have gained an exemption until April 2021. The move was widely telegraphed after numerous warning shots in previous budgets and a consultation period which ended last month.

The Chancellor announced that, in future, employees swapping salary for benefits will pay "the same tax as the vast majority of individuals who buy them out of their post-tax income". However, in a concession to lobbying from the fleet industry, he confirmed "arrangements for cars, accommodation and school fees will be protected until April 2021".

There is also an exemption for Ultra Low Emission Vehicles (currently defined as those producing less than 75 gm/km CO2, but possibly dropping to 50 gm/km) along with cycle to work schemes, childcare and pensions advice.

The exact mechanism for reducing the benefit of salary sacrifice remains unclear and may be part of a wider review of benefits in kind. The government has said it will consider how benefits in kind are valued for tax purposes and will publish a call for evidence on the valuation of all benefits in kind at Budget 2017.

Also announced in the Autumn Statement were new company car tax bands for ULEVs for 2020/21. These are designed to "provide stronger incentives for the purchase of ULEVs" but now include a complex formula based on the number of zero-emissions miles that the vehicle can drive.

The statement said: "The appropriate percentages for zero emission cars (for 2020/21) will be 2%, while those for cars with CO2 emissions between 1g/km and 50g/km will vary between 2% and 14% depending on the number of zero-emission miles the vehicle can travel".

The measure also increases appropriate CCT percentages by 1 percentage point to a maximum value of 37% for cars with CO2 emissions of 90g/km and above.

In a less complex move, the Chancellor confirmed that fuel duty will remain frozen at 57.95p per litre for the seventh year in succession. There was also a pledge of £390m to help the development of low emissions and connected autonomous vehicles, alongside a 100% capital allowance on investment in electric vehicle infrastructure.

The widely forecast investment in new roads amounts to a £1.1bn spend in "English local transport".

Industry reaction:

"The freezing of fuel duty will have a positive impact across the board for businesses, however, this is particularly significant to those in the transport and logistics industry which are experiencing pressure from rising oil prices and currency fluctuations," said Phil Dakin, managing director of Duff & Phelps. "Fuel duty is widely condemned as having a disproportionate impact on the cost of petrol and even following today's announcement the UK has one of the highest level of taxation when it comes to fuel, which it can be argued results in stymied economic growth through lost investment and expansion by corporates."

"It's promising to hear that the Treasury is set to invest in the English road infrastructure. With the decision made weeks ago to back a third runway at Heathrow, the Government can now focus on getting the economy 'match fit', particularly in the example of potential new road and rail links between Oxford and Cambridge. By pledging this kind of investment, the Government is securing the provision for a better connected and more dynamic infrastructure that suits both the needs of people and businesses," said Matt Dyer, managing director of Leaseplan.  "The vehicle rental and leasing industry contributes £24.9 billion a year to the UK economy and in 2015 the leasing industry accounted for half the number of new cars registered on the road. So this news will be especially pleasing for businesses, whose roads have suffered from poor organisation, congestion and pitted surfaces for decades. These roads are vital for the businesses that will power the country through years of lower-than-expected growth, so it is reassuring that the UK Government now views this as a priority."

The Chancellor's commitment to freeze fuel duty will be greeted with relief by motorists and businesses at a time when we know drivers are concerned that fuel prices will rise significantly over the next six months - which might be the case if oil-producing countries that are members of OPEC commit to an oil production cut when they meet this time next week," said RAC fuel spokesman Simon Williams. "The Chancellor's decision to extend the freeze shows that he understands that motorists are the backbone of the British economy. It is vital that in such uncertain times, the Government can give as much certainty to them as possible."

"In 2016 the freeze in duty boosted GDP by 0.57%, generated 112,000 new jobs and put £5.3bn back into hard working Brits consumer spending. It also bolstered tax revenues by 0.2%," said Brian Madderson, chairman of the Petrol Retailers Association. "Trend volume sales in diesel have delivered a tax windfall to the Treasury of £1 billion and we will be looking to persuade the Chancellor to deliver an actual fuel duty cut in the Spring 2017 Budget."

"The Government's acceptance of the National Infrastructure Commission's recommendations for the Cambridge, Milton Keynes, Oxford corridor is most welcome," said Sir John Armitt, deputy chair of the National Infrastructure Commission. "The growth corridor between Cambridge Milton Keynes and Oxford could help fire the British economy, but only if we back it with the homes and infrastructure it needs to thrive. Last week the NIC presented the compelling case for investment in East West rail and the Oxford Cambridge Expressway, as part of a wider joined up plan to help this region succeed. This is a once in a generation opportunity and the government is absolutely right to accept those recommendations."