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Motor trade bodies and suppliers disappointed with Budget statement

Industry bodies have responded to Budget 2018 measures announced yesterday by the Chancellor of the Exchequer.

The National Franchised Dealers Association (NFDA), said the news that fuel duty will be frozen for the ninth year in a row and income tax allowances will rise from April are positive for consumers’ disposable income.

It also applauded a planned government review of the impact of the Worldwide harmonised Light-vehicles Test Procedure (WLTP) on the VED and company car tax systems by next spring, while the rise of the annual investment allowance (AIA) to £1 million from £200,000 for two years from January 1 “will help support automotive retailers’ investments in their dealerships,” said director Sue Robinson.

Mike Hawes, SMMT chief executive, said there are some welcome announcements in the Budget. “Amid continuing Brexit uncertainty, however, the automotive industry was looking for a stimulus to boost a flagging new car market. We wanted to see more incentives for consumers to purchase the latest, most environmentally friendly vehicles.

"The forthcoming review into the impact of WLTP on Vehicle Excise Duty and company car tax must, therefore, ensure that motorists buying the latest, cleanest cars are not unfairly penalised.”

He said the review must ensure it encourages the newest, cleanest vehicles on to UK roads rather than incentivising consumers and businesses to keep older vehicles going longer.

Matt Dyer, managing director of LeasePlan UK, voiced concerns about the lack of guidance on company car tax:

 “What is it going to take for the Chancellor to reveal the rates of Company Car Tax for 2021-22 and 2022-23? We used to know these rates for the next five years, but now the Government seems determined to keep fleets and motorists in the dark. This is terrible for businesses who are trying to plan for the future, particularly at a time when there is already so much uncertainty. Philip Hammond must rectify this as soon as possible – preferably in the forthcoming Finance Bill.”

He said the transition to WLTP data for tax purposes could be costly for some drivers. “Even the interim ‘NEDC-correlated’ data, which is currently being used, could raise emissions figures and push some vehicles into higher tax brackets. That’s why we’ve been calling on the Chancellor to help out – and, with his announcement of a review into the effect of WLTP on motoring taxes, it seems as though he may be listening. We now wait until spring to see whether he is really going to deliver on this promise.”

E3 Consulting highlighted that, from now, new non-residential structures and buildings will be eligible for a 2% capital allowance where all the contracts for the physical construction works are entered into on or after October 29, 2018.

Managing director Alun Oliver said this will be of interest for all new-build car dealerships.

“While half as generous as the previously abolished Industrial Buildings Allowances, this new capital allowances category will provide a very real incentive to property owners to invest further,” he said. “For the first time, all new-built commercial property will benefit from tax relief on the entire project cost.”

The announcement to introduce a new financial package with around £900 million in business rates relief is very welcome, said MHA MacIntyre Hudson, but unlikely to benefit motor retailers.

Nathan Sutcliffe, tax director at MHA MacIntyre Hudson, said “With the almost constant press reports of retailer distress, store closures and company voluntary arrangements (CVAs) all seeming to focus on business rates and landlords, it’s a very welcome move by the Chancellor from 2019/20. However, with the relief aimed at premises with a rateable value of less than £51,000 it’s unlikely many retailers in the motor sector, who have substantial property portfolios, will benefit.

 

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