autumn budget 2017

An emphasis on future technology and increasing the attractiveness of ultra-low emission vehicles were the key takeaways from the Chancellor's Autumn Budget. Our industry experts have reviewed the announcements and analysed what they mean for company vehicles.

Watch our video to see our consultants' initial reaction to the Chancellor's Budget statement and how it affects company vehicles.

Key points from the Autumn Budget 2017

With the UK on the 'brink of a technological revolution' the Chancellor re-affirmed his commitment to bringing driverless technology to Britain's roads by 2021 but at the same time spoke of the need to prioritise a move to electric vehicles. As such, many of the announcements play to this aim.

INVESTMENT IN ELECTRIC VEHICLE TECHNOLOGY

The Chancellor announced significant investment in the infrastructure necessary to support more widespread uptake of electric vehicles:

A new £400m Charging Investment Infrastructure Fund will be created through a combination of public and private investment.

An extra £100m will be provided to guarantee the continuation of the plug-in car grant to 2020.

£40m will be invested in charging R&D to boost the appeal and viability of zero-emission vehicles.

VEHICLE EXCISE DUTY

The key change is the imposition of a VED supplement on new diesel cars first registered from 1st April 2018, which will see their First-Year rate calculated as if they were in the VED band above. This will only be applied to cars that do not meet the new RDE (Real Driving Emissions) 2 Standards (61), which certifies emissions limits in real driving conditions. It applies regardless of the funding method used – across private purchases, PCP, finance leases etc.

Headline figures have tended to over-inflate the impact of the changes to the First-Year VED rate for diesel cars that don’t meet RDE 2 standards. Our message is that fleet owners should not be overly concerned. The change to VED will depend on the band, but even at 191-225g, the most they could be expected to pay is around £400. The majority of our corporate fleets are below 114g, so whilst some will see costs towards the higher end, the vast majority will see just a moderate cost of between £15 and £30.

VED rates for cars, vans and motorcycles registered before April 2017 and First-Year rates for cars registered after April 2017 will increase in line with RPI (Retail Price Inflation) from 1st April 2018. There was some reassurance that emissions testing will remain under the NEDC (New European Driving Cycle) system until at least 2020, rather than moving to the new WLTP (Worldwide Harmonised Light Vehicle Test Procedure), as was speculated.

REAL DRIVING EMMISSIONS 2 STANDARDS (61)

The Chancellor made reference to cars that meet RDE 2 Standards both in his changes to VED and to the Diesel Supplement Charge increase to Company Car Tax. This, he claimed, would encourage manufacturers to invest in producing vehicles that will meet these standards.

Cars that meet the standards are not expected to come into service before about 2020, when they are required by EU rules. Fleet decision makers will need to consider the implications of this on their overall fleet and Lex vehicle experts will be able to support forward planning to select cars that meet the new standards.

COMPANY CAR TAX

The Company Car Tax Diesel Supplement will increase by 1% - taking it from 3% to 4% - on those diesel cars which do not meet the RDE (Real Driving Emissions) 2 Standards, from 6th April 2018. This supplement does not apply to hybrid cars, and will be removed for those cars which meet RDE2.

Transition to WLTP from NEDC.

Confirmation that company car tax will continue to be based on the NEDC (New European Driving Cycle) system until 2020 allows fleets to plan for the future.  A consultation will be carried out regarding the transition to WLTP (Worldwide Harmonised Light Vehicle Test Procedure) based taxation post 2020.

BENEFITS-IN-KIND

Again supporting the wider usage of electric vehicles, the Chancellor announced that, from April 2018, there will be no benefit-in-kind charge on the electricity that employers provide to charge employees electric vehicles.

FUEL DUTY

The freeze on fuel duty for the 8th year running in 2018-19 will be welcomed by individuals and businesses. Since 2011, fuel duty freezes mean that the average driver will have saved around £850 by April 2019 when compared to the pre-2010 escalator plans.

FURTHER INFORMATION

In addition to the key points above, which will affect company vehicles in the coming months, the Chancellor made some further announcements around vehicles. These include:

The government will review whether existing fuel duty rates for alternatives to petrol and diesel are appropriate in time for Budget 2018.

Following the publication of the government’s National Air Quality Plan in July, changes to the diesel supplement in Company Car Tax and changes to VED will fund a new £220m Clean Air Fund, which will allow those local authorities in England facing the most challenging pollution problems to implement new measures to tackle air quality.

The move to electrify 25% of cars in central government department fleets by 2022.

AUTUMN BUDGET - THE BRINK OF A TECHNOLOGICAL REVOLUTION?

In his Budget speech, the Chancellor focused heavily on the future, harnessing existing technology and investing in new advances to drive economic growth and build a better environment. Vehicle technology was at the heart of this, from R&D investment to boosting the attraction of ULEVs.

As the UK’s leading business fleet leasing company, Lex Autolease has developed a variety of different platforms to share our expert’s opinion and insight into what existing and future technology means for company vehicles.

TAX GUIDE

This guide provides an overview of changes announced by the Chancellor, supported by easy-to-read tables which display the main personal and corporate tax rates.

FUEL CHOICE & EMISSIONS

For more information about fuel choice, emissions and incorporating electric vehicles into a balanced business fleet, read our Fuel Choice & Emissions whitepaper.

CASE STUDIES

To hear first-hand experiences of investing in electric vehicles from our clients, watch our video case studies: Implementing an electric fleet and incorporating electric fleet infrastructure.

DRIVING TECHNOLOGY

To find out more about the benefits and challenges of adopting new technology and changing the way business fleets operate, visit our dedicated Driving Technology page.

PODCASTS

Download our podcast discussing the future of the business fleet, which features a business fleet manager and prominent vehicle manufacturer.

BUDGET REACTION

Watch our video to see our consultants' initial reaction to the Chancellor's Budget statement and how it affects company vehicles.

Contact us

Further insight into the Autumn Budget 2017 will be uploaded here. For more information about the changes announced in the Autumn Budget, speak to your Lex Autolease consultant, who will be happy to discuss the possible impact on your fleet.

Email: fleetconsultancy@lexautolease.co.uk