Chancellor of the exchequer Philip Hammond has delivered his first Budget speech, and although viewed as a more ‘transitional Budget’, with big announcements being delayed until the autumn, there was some key points raised for fleets.

This was, in fact, Hammond’s final spring Budget as changes to the two major fiscal announcements were confirmed in November last year. From 2018, March will run a Spring Statement and the main Budget will now take place in the autumn.   

With so much negative press surrounding diesel and the spotlight firmly on air quality here in the UK, most of us were expecting the Government to make some kind of announcement around the taxation of diesel cars.

Although no immediate plans were announced, the key message from Hammond is that fleets need to be prepared for a new tax regime, which could be implemented before the end of the year. Announcements of wider air-quality plans were also delayed until the autumn, giving the Government time to meet with key stakeholders ahead of any changes.

The Budget document stated: “The Government is committed to improving air quality, and will consult on a detailed draft plan in the spring which will set out how the UK’s air-quality goals will be achieved. Alongside this, the Government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017.”

Rumours of a diesel scrappage scheme remained rumours too, as the Government made no announcement or hinted at any plans. However, if it is to be introduced, it’ll likely be alongside the air-quality plans in the autumn.

“The chancellor has fired a warning shot at diesel owners and drivers, with the suggestion in the Budget document that a new tax regime covering diesel vehicles could be announced before the end of the year,” said David Bizley, chief engineer, RAC. “This uncertainty is bound to be of concern to private and business motorists alike, who will be wanting urgent clarity on just what the Government plans to do.”  

Despite the lobbying efforts of key rental industry bodies, VED plans are still set to take effect from 1 April. This was followed by an announcement that, from the same date, rates for cars and vans registered before April 2017 would increase in correlation with the Retail Prices Index.

“The chancellor chose not to defer the introduction of new Vehicle Excise Duty rates which come into force next month. As a result, the car hire industry will see its first-year VED bill rise by almost 400% in 2017,” said Gerry Keaney, chief executive of the BVRLA. “Firms will also be unable to claim back £1.67m every year in legitimate refunds. Car rental companies operate the newest fleet on UK roads, and the average rental car is just eight months old. The sector purchases around 324,000 cars each year, but this number is now likely to fall as our members lengthen their operating cycles in an attempt to reduce the cost impact of the new VED regime.”

There was some good news for haulage companies, though, as HGV VED and Road User Levy rates will be frozen from 1 April 2017 to allow the Government time to work with the industry to update the current system, which will aim to incentivise companies that use roads efficiently and help improve congestion and air quality.

Salary sacrifice tax and National Insurance changes are still due to be implemented from 2017/18, although no more details were revealed during the Budget, something many had been expecting. More clarification is expected in March next year.

Some good news for motorists included the announcement that fuel duty has been frozen for the eighth consecutive year, remaining at 57.95ppl.

Investment into driverless cars and electric vehicle research also got a welcomed boost with the Government pledging a further £270m investment to help keep the UK at the forefront of technological development.

The Industrial Strategy Challenge Fund (ISCF) will distribute the investment throughout 2017/18, which will also include the manufacturing of EV batteries.

“The chancellor’s announcement of £270m for robots, driverless cars and biotech is a welcome boost for automotive companies and will benefit consumers,” said John Leech, head of Automotive at KPMG UK. “This investment will enable the UK to be an early adopter of shared-use driverless cars and Britain’s consumers will enjoy the largest cost savings in the world from this technology.”

Improvements to the UK’s road network look set to continue too thanks to a further £690m pot being made available for local authorities to help tackle congestion, £490m of which is expected to be available as early as autumn 2017. A further £90m for the North and £23m for the Midlands was also announced to help ease congestion in particular ‘pinch-point’ areas within the national road network.

In other Budget news, the main rate of Class 4 National Insurance contributions for the self-employed will increase from 9% to 10% in April 2018 and, sadly, the price of a pint of beer is up by 2p.