UK Leasing

Budget 2021: Reaction of the fleet and rental industry


The The government announced a series of tax and spending proposals in the 2021 budget, but the announcements for the fleet and the rental industry were slim in the field.

The planned fuel tax hike has been removed, but there is no news on future benefit-in-kind (BIK) tax rates beyond 2025.

Tim Buchan, CEO of Zenith, said: “It is promising to see the government’s continued commitment to greener transportation, especially in its continued investment in electric vehicle charging infrastructure.

“Today’s announcement represents a total investment of £ 2.8 billion in the electric vehicle sector by 2030, demonstrating the commitment to meeting the government’s net zero targets.

“However, what is still needed is clarity and detail on its long-term plan to decarbonize UK vehicles through taxation, subsidies and incentives.”

Buchan welcomed the freeze on fuel taxes, but added: “There is no visibility on the structure of vehicle taxation beyond 2025.
“While this announcement is encouraging, a more comprehensive roadmap is needed so that the fleet industry can fully understand the role it plays in helping the government meet its goals and effectively prepare for a low future. carbon emission. “

Gerry Keaney, Managing Director of the British Vehicle Rental and Leasing Association (BVRLA), says the Chancellor missed an opportunity to give the industry essential clarification when it needs it most.

“At a time when the adoption of electric vehicles is poised to accelerate, the silence around areas such as in-kind tax rates is deafening,” he said. “This only increases fears that rates will be drastically increased across the board.

“BVRLA members had clear demands for this budget. The Chancellor has not given tangible details on these requests, which means questions remain about the government’s plan.

“Last week’s Net Zero strategy is a very positive step in the right direction; what we needed in today’s budget was more detail. Instead, we were given titles that offer no clarity, no forethought, and no confidence. ”

Sean Kemple, Managing Director of Close Brothers Motor Finance, said: “We’re finally starting to see the government putting its money where it says it goes when it comes to investing in greener roads.

“An additional £ 620million for public charging in residential areas and targeted subsidies for plug-in vehicles will be a critical acceleration on the path to Net Zero and help encourage drivers to switch to electric vehicle ownership.

“Investing in charging points is an infrastructural necessity if we are to integrate the use of electric cars into our daily life. But we still have a long way to go in making electric car ownership accessible, affordable and convenient for motorists. “

Paul Hollick, President of the Association of Fleet Professionals (AFP)AFP said the fuel tax freeze was welcome but not unexpected given the rate of increase in gasoline and diesel fuel in recent months.

But added: “There are a few areas of disappointment. The biggest of these is the lack of in-kind tax tables for 2025-2026, which we campaigned for and remains a problem for fleets embarking on electrification.

“We would also have welcomed any sign of future discussion on the government’s future thinking on road pricing, but it looks like the conversation is continuing.

“In a broader sense, the good news is that the economy is a relatively good place after Covid – or at least a better place that could have been expected – although there remains a long list of important issues, from the semiconductor shortage with the emerging impact of Brexit.

Richard Hipkiss, Managing Director of Fleet Operations, also welcomed the freeze on fuel taxes for the 12th consecutive year.

However, he said: “This announcement comes against a backdrop of mounting pressure on fleet fuel spending, with gasoline prices hitting new highs, somewhat offsetting the triumph of fuel rights activists over continuous freezing.

“This makes the need for strict cost control measures and efficient fuel strategies all the more critical.

‘Changing priorities and making the UK a forerunner in the race to zero was clear, with a pot of £ 817million pledged for the electrification of UK vehicles and their supply chains, in plus the recently announced £ 620 million in additional investment for public charging. in residential areas and targeted subsidies for plug-in vehicles.

“However, the decision not to reduce VAT on home energy in the face of skyrocketing bills could potentially dampen enthusiasm for electric vehicle adoption among company car users.

“While the impacts of the budget are not yet visible or felt, fleets will undoubtedly look forward to seeing how these and other factors affect spending and the makeup of their fleet over the coming year and beyond. “

Steve Nash, CEO of the Institute of the Automotive Industry (IMI) says the Chancellor’s promises in training and development, to build a stronger economy, must be welcomed.

“The £ 3.8bn investment during the current Parliament in training is good news for the UK as a whole,” he said.

“However, there was a lack of details on how the additional £ 2.7bn for apprenticeships until 2025 will be applied.

“In particular, we believe there needs to be an acceleration in updating learning models to reflect new innovations in the automotive industry, which currently relies very heavily on employer input.

“These employer panels would certainly benefit from additional resources to support their important work. Without this, the government’s own decarbonization ambitions could be seriously compromised. “

Currently, Nash says the learning models are not fully aligned with the evolution of electric vehicles (EVs) and other new and rapidly evolving automotive technologies.

“Yet the pace of growth in sales of electric vehicles in particular has increased tremendously over the past 12 months,” he said. “Without a properly skilled workforce, the electric vehicle revolution – which is fundamental to the government’s decarbonization plan – could stagnate.

“As important as it is to develop the pool of new talent through apprenticeship, we would also like to see more funds to help the existing workforce develop new skills to deal with electric vehicles. in particular, in order to avoid an impending skills gap which we have already identified.

“We look forward to working with the government to help them identify the steps that need to be taken to support employer panels and help them ensure that automotive apprenticeships keep pace with rapidly changing technology. .

Matthew Walters, Head of Consulting Services and Customer Value at LeasePlan UK, says that while the current freeze on fuel taxes is a welcome relief for motorists and fleets, its importance should not be overstated.

“This will not really affect prices at the pump, which are currently at near record highs – and could rise due to the lingering problems with oil prices and supplies,” he said.

“This budget has left the fleet industry with more questions than answers. So many previously announced consultations – on the VED for cars, on the VED for vans, on a ZEV mandate, and more – have been allowed to pass without any confirmed legislative action. And what exactly is the government planning for road pricing, which was one of the main topics of discussion before today?

“If the fleet industry is to prepare for the future, then it needs to answer some of these unresolved questions as soon as possible. ”

Regarding the company car tax, Walters said that unlike his immediate predecessors, Chancellor Rishi Sunak had given fleets and motorists “sufficient warning” of upcoming BIK rates in his previous budgets. However, today’s budget did not give us the rates for 2025-2026 or beyond.

“With the spring budget expected early next year, this is not yet a pressing concern. But we urge the Chancellor to continue his transparency record – and deliver those tariffs as soon as possible, so that fleets that are contracting today are able to plan properly for the future. ”


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