How the Autumn Statement affects contractors who drive
Starting with the more positive news for business motorists to come out of Phillip Hammond’s debut Autumn Statement, fuel duty has been frozen for the seventh consecutive year, meaning that contractors aren’t faced with having to dig deeper in order to put fuel in their vehicles, and nor are the firms some of them work for, such as couriers or construction companies.
The lamentable state of UK roads often results in delays along with damage to vehicles’ wheels, suspension and other components, so additional welcome news for contractors who drive is that an extra £1.1 billion will be provided by the government by 2020-21, aimed at relieving congestion and upgrading key roads. £220 million will also be spent on alleviating notorious pinch-points, helping the self-employed make more efficient use of their valuable time.
Contractors working for investment-minded organisations may be encouraged to consider switching to buying or leasing an ultra-low emissions vehicle (ULEV) or even a completely electric car, after the government announced a 100% first-year capital allowance between now and March 2019 for the installation of charging points, which could allow some contractors to travel to and from their places of work on just electricity.
Road tax bands for business vehicles will change in 2020 when zero-emissions cars will be taxed at just 2%, presenting an excellent incentive to go green, whilst BIK rates for cars emitting between 1 and 50g/km of CO2 will range from 2 to 14% depending on a vehicle’s zero-emissions range ability. Combined with the government’s decision to keep salary sacrifice advantages open for ULEVs emitting up to 75g/km, these two fiscal announcements seem very positive. However, the 15-band car tax system for 2020 onwards will be complex to say the least and with businesspeople and organisations facing a 3-year wait during which time tax will actually increase until the much-reduced rates come into play, the fear is that clean vehicle adoption will be deferred, to the detriment of the environment.
Car insurance is also set to increase, on the back of the Chancellor confirming that insurance premium tax (IPT) will rise to 12% from June 1st 2017, which is disappointingly the third time the tax will have gone up within the last eighteen months.
From the perspective of contractors and others who rely on their vehicles in order to work, the first post-Brexit Autumn Statement is clearly a mixed bag and it could be argued that the benefits for motorists will largely be medium-term with only a few short-term gains. Still, in these unpredictable economic times, it could’ve been worse.
This news was brought to you by our partners, Vehicle Consulting of Stockport, who provide discounted business car leasing and personal contract hire (PCH) prices to Umbrella.co.uk clients across the UK. Find out more