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Budget must provide long-term tax certainty for fleet sector, says BVRLA

The chancellor is being urged to provide long-term tax certainty in the Spring Budget to support recovery in the vehicle rental, leasing and fleet sectors.

BVRLA chief executive Gerry Keaney

So says the BVRLA, which has written to HM Treasury and said the Spring Budget on Wednesday 3 March provides an opportunity for the Chancellor to introduce measures that will give the fleet industry the confidence to invest, create jobs and support economic recovery.

“We need a long-term perspective on tax to combat uncertainty, support for the hard-hit rental sector, and some creative thinking on tax allowances that can unlock investment in green technology,” said chief executive Gerry Keaney.

In its pre-Budget submission, the BVRLA has urged the Chancellor to take three clear measures:

Freeze Vehicle Excise Duty until April 2022 – The drop-off in the tourism and leisure market due to Covid-19 has seen the vehicle rental sector lose around 40% of its annual transactions. A freeze in VED would support this hard-hit sector and would help firms’ cashflow and protect jobs.

Clarify company car tax rates up to 2025/26 – Long-term clarity would leasing firms and customers to calculate affordability of a lease contract, which could be four years in length. Long-term certainty is particularly crucial for future Benefit-in-Kind rates for battery electric vehicles, in order to drive uptake of zero-emission vehicles.

Expand green investment tax allowance – The full cost of investing in workplace charging infrastructure is a barrier for many fleets. Although businesses can offset the cost of charge points to reduce their tax liability, they cannot offset the full cost including groundworks, installation, and grid upgrade. This needs to change to incentivise private investment into expanding the UK’s charging infrastructure.

Keaney said: “2021 will continue to be tough and the Government will need to extend further support to businesses. Fiscal support is crucial and providing clarity, certainty, and creative incentives are vital to that mix. This will enable fleets to take important decisions that will help to make 2021 a year of recovery.”

Earlier this month, the BVRLA also called for the Government to do everything “it can to support the vehicle buyers that underpin the UK’s new car market”, after SMMT new car registration figures showed 2020 was a “catastrophic” year for the new car market but a major tipping point for EV uptake.

The Government’s priorities must include fleets too. According to the BVRLA, the Government’s close work with business fleets to develop a set of powerful grants and tax incentives and invest in a robust public charging network must remain a focus in the Budget.

In its 2020 registration figures, the SMMT noted that most (68%) of pure electric and PHEV new car registrations were for company cars – indicating the importance of the sector in helping the new car market switch to BEVs and PHEVs ahead of the 2030 petrol and diesel new car ban.

Speaking at the time of publication of the SMMT stats, Keaney said: “The chancellor must continue to ring-fence the long-term grants and tax incentives that make electric vehicles affordable. He must also resist the urge to pile more motoring tax increases on fleets and drivers that have yet to make the transition to zero-emission motoring.”

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Natalie Middleton

Natalie has worked as a fleet journalist for over 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.