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Budget 2016: BVRLA expresses concern over announcements

Chief executive Gerry Keaney said: “While it may have been touted as pro enterprise and pro infrastructure, this Budget gives the rental and leasing industry plenty of cause for concern. 

“We welcome the decision to freeze fuel duty, VED rates for HGVs and the Road User Levy, as well as the announcement that Corporation Tax will be cut to 17% by 2021. Yet the Chancellor missed a number of opportunities to give the vehicle rental and leasing industry the shot in the arm it deserves,” Keaney commented.

“While the decision to retain the 3% diesel supplement for the next three years was announced in the 2015 Autumn Statement, it’s unacceptable that the Chancellor has not seen the error of his ways and done a U-turn in this Budget. This punitive tax on company car drivers penalises innocent people for decisions they have already made.”

Keaney added: “It’s pleasing to see the Chancellor extend 100% first year allowances for businesses purchasing ultra-low emission cars for a further three years until 2021, though yet again he has ignored our calls to make this benefit available for companies that lease their cars. This unfairly discriminates against SMEs who rely on lease arrangements to access new low-emission cars, and instead favours cash-rich businesses who can afford to purchase cars outright.”

Additional changes were announced relating to capital allowances which will affect businesses leasing new cars from April 2018 until 2021.

“It’s unsurprising that the Chancellor wants to reduce the main rate threshold for capital allowances for business cars from 130g/km CO2 to 110g/km in 2018, and we welcome the advance notice he has provided,” said Keaney.  

“We still remain dissatisfied with the retention of the lease rental restriction on customers as this is effectively a double emissions tax. Leasing firms are restricted to claiming 8% of the writing down allowance, and customers can only claim 85% of the lease rental payment,” he added. 

The BVRLA will respond to the Government’s discussion paper on the tax treatment of leases in due course. The association also noted a reference in the Budget documentation about limiting the range of benefits of some salary sacrifice schemes. Keaney commented: “The Government says it intends to maintain the attractiveness of salary sacrifice schemes, but only mentions childcare, cycle purchase and pension schemes. We will have to wait for further announcements about cars provided under salary sacrifice schemes – but any changes would impact on the estimated £4,500 that HMRC receives in tax revenue per year from each salary sacrifice car.” 

Summarising, Keaney said: “It’s vital that the Government understands the cumulative effect of its announcements, rather than looking at them in isolation. The rental and leasing industry is responsible for more than four million vehicles and contributes £24.9billion to the UK economy, and it relies on a fair and simple system of taxation to continue to do so.”

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.