The fleet sector has responded to yesterday’s Spring Statement, highlighting how actions to outline company car tax rates going forwards and new incentives on EV take-up would have brought much-needed support.

The fleet sector has said it needs greater clarification on future Benefit-in-Kind rates beyond 2025, which will need to be confirmed in the Autumn Budget, if not before

Intended to “support the British people as they deal with the rising costs of energy”, the Chancellor’s Spring Statement included a much-expected announcement on a fuel duty cut, as well as the removal of VAT on energy-saving devices, a doubling of the household support fund, a move to cut and reform taxes on business investment, a rise in the threshold on NI payments and a cut to the basic rate of income tax in 2024.

What was not included though was any insight on company car tax rates past 2024/25 – failing to bring clarity to fleets looking ahead. The move has been slammed by Jon Lawes, managing director, Novuna Vehicle Solutions, who said: “As expected, the Chancellor wasted no time in confirming plans for ‘the biggest cut in fuel duty ever’ in the Spring Statement, with the reduction of fuel prices against the eye watering 55% price increases witnessed over the past two years.

“What UK businesses require now however, is greater clarification on future Benefit-in-Kind rates beyond 2025, which will need to be confirmed in the Autumn Budget, if not before.”

Matthew Walters, head of consultancy services and customer value at LeasePlan, also said the lack of insight on company car tax rates would hit fleets hard.

“Previously, Rishi Sunak had a good record on warning businesses and motorists of upcoming company car tax rates. However, that record is starting to tarnish. The rates for 2025/26 and beyond still haven’t been confirmed – meaning that fleets entering into three- or four-year contracts today are unable to plan properly for the future.”

And while Walters noted the Chancellor’s publication of a Tax Plan for the rest of this Parliament, he said that so many other tax reviews and consultations – into VED for cars, into VED for vans, into a ZEV mandate, and more – have not yet led to any confirmed legislative action, even though some were originally announced years ago.

“If some of these ideas have been dropped, then the Chancellor should tell us so. If not, then he should confirm the details as soon as possible. The fleet industry needs as much information as possible in order to fully prepare for the future.”

LeasePlan also said that the fuel duty cut is likely to offer only limited relief to squeezed budgets – and if the trend on rising fuel prices continues, the discount could effectively be wiped out within days.

“Of course, what it most helpful for the future is strong, consistent, long-term incentives for electric motoring, so that more people can afford to switch to EVs and avoid high prices at the pump,” Walters stated.

Fleet Operations also highlighted how the Spring Statement failed to support zero-emission vehicle take-up.

David Bushnell, director of consultancy and strategy, commented: “The Chancellor may have scrapped VAT on home energy-saving measures such as insulation, solar panels and heat pumps but has offered fleet operators nothing in the way of any new incentives to encourage EV take-up which may have helped balance out the CO2 impact of the fuel duty rise.”

A point of focus for rising costs

With the OBR also having revealed yesterday that UK living standards are set to fall at the fastest pace on record in the post-war period, concerns continue to mount about the outlook for consumers and businesses.

Paul Hollick, chair, Association of Fleet Professionals, said: “The Spring Statement really does serve as a point of focus for the rising costs that all fleets are currently facing, especially given poorer growth and inflation forecasts. Literally every part of the cost equation that goes into operating cars and vans are facing substantial rises.

“While the Chancellor has taken some actions that will serve to offer some mitigation, such as the reduction in fuel duty, none of these will really alter the overall direction of travel.

“The AFP view, in general, is that businesses should look to proactively manage their way through this situation and, for many, that will ultimately mean speeding up EV adoption, accessing permanently lower fuel and overall running costs.”

Many of his points were echoed by Peter Golding, managing director, FleetCheck, who said that while rising costs tend to be largely framed in the media as a problem for consumers, they are also an issue that affects businesses dramatically.

“With inflation now above 6% and fuel prices having risen exponentially in recent months, fleet running costs are unavoidably increasing and the actions of the Chancellor in reducing fuel duty, while welcome, amount to little more than tinkering,” he said.

“I think the underlying message for fleets here is a small p political one. Following the pandemic, when the Government stepped in and took a high degree of responsibility for keeping the economy on a sure footing, we’re now returning to a more traditional situation when interventions will be much more limited.

“Businesses and their fleets are going to have to mitigate rising costs through more effective management rather than looking for more dramatic forms of external help.”