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The Government’s Autumn Statement 2012 – what it means to you

Posted on by Matt Topham

Chancellor of the Exchequer George Osborne delivered the Government's annual Autumn Statement in the House of Commons yesterday (Wednesday, December 5).

Sometimes described as a mini-Budget, he revealed to the nation the state of the country's economy and public finances, in line with the latest economic forecasts from the independent Office for Budget Responsibility.

While admitting that it was taking time, the Chancellor said, 'the British economy is healing' and the country was 'on the right track' out of recession.

Below we highlight what the Chancellor said in relation to the UK fleet industry and the wider motor industry.

Company car tax

The Government is to consider the case for providing time-limited incentives through company car tax to encourage the development and uptake of 'ultra-low emission vehicles'.

The surprise proposal contained in the small print of the papers accompanying the Chancellor's Autumn Statement, follows a comprehensive announcement in this year's spring Budget of the shape of company car benefit-in-kind tax up to and including 2016/17.

However, the Government's proposal was short of detailed and did not reveal what its definition of an 'ultra-low emission vehicle' was.

But, the document did refer to 'ensuring that all company cars are subject to a fair level of taxation'.

The Government says it will seek the views of car manufacturers and motoring groups ahead of Budget 2013, which is expected in March.

The announcement could be interpreted as a Government U-turn having announced in the spring that from 2015/16 all company cars with emission levels below 95 g/km will be taxed at 13%.

That means that any company car drivers choosing an electric vehicle will see their benefit-in-kind tax bills increase from 0% – a move that was widely criticised at the time with many commentators saying that it spelt the death knell for corporate demand for electric cars before it had taken off.

Similarly, drivers of a company car with emissions of 1-75 g/km will see their tax bill rise from 5% (8% for diesel cars) in 2012/13 to 13% in 2015/16 (16% for diesel cars) and those at the wheel of a car with emissions of 76-94 g/km will see their tax bill rise from 10% (13% for diesel cars) in 2012/13 to 13% (16% for diesel cars) in 2015/16.

Fuel duty

The Government has bowed to business and public pressure and cancelled the 3.02p per litre fuel duty increase (4p per litre including VAT) that was planned for January 1, 2013.

In addition, Chancellor of the Exchequer George Osborne said that the Government would defer the 2013/14 increase from April 1, 2013 to September 1, 2013 with any future increases in duty taking effect from September 1 in subsequent years for the duration of the current Parliament.

The moves mean, according to the Chancellor that fuel duty will have been frozen for nearly two and a half years and, as a result of Government intervention, pump prices were currently 10p per litre lower than under the previous Government's plans

Government calculations show that had the duty escalator been implemented then duty would be at almost 68p per litre by 2014/15, instead it will be at about 57p a litre.

The Government said its actions in respect of fuel duty amounted to a £19 billion package of support over the current Parliament to 2015/16, meaning that it would cost the typical motorist £5 less to fill up their tank every time they visited the pump from January 2013, and £8 less by the end of the Parliament.

As a direct result of Government action, fuel duty in real terms is forecast to fall over the current Parliament by 8%, according to HM Treasury papers. Had the Government implemented the fuel duty escalator, as proposed by the previous administration, rates would have increased by 7%, it is claimed.

Road building

Road tolling or charging could be back on the Government agenda as it says it is 'assessing the feasibility of new ownership and financing models for the strategic road network'

HM Treasury papers accompanying the Chancellor's Autumn Statement signalled that the Government would report on progress of its study in the New Year.

Nevertheless, it is likely to mean some form of tolling or road charging will be introduced as the Government looks to encourage more private finance to further develop the UK's road infrastructure.

The announcement was buried within a section of the documentation that said the Government was committed to ensuring that the road network was fit for the UK's future transport needs.

The Government says it is investing an additional £1.5 billion to enhance and improve the road network and reduce congestion. It highlighted a number of schemes including further improvements on the A1 to bring it up to motorway standard; building a new link between the A5 and M1 in the east of England; and tackling congestion around Junction 30 of the M25.

Capital allowances

The British Vehicle Rental and Leasing Association (BVRLA) reiterated its call post-Autumn Statement for the leasing industry to retain its access to the 100% first-year allowances available on ultra-low emission vehicles.

In the spring Budget, the Government announced that it would reduce the emissions threshold which cars are eligible for first year capital allowances from 110 g/km to 95 g/km from April 2013, simultaneously saying that leased business cars would no longer be eligible.

The BVRLA was hoping the Chancellor would reverse his decision on leased cars no longer being eligible for the allowance in the Autumn Statement.

BVRLA chief executive John Lewis said: "We are due to meet with the HM Treasury officials this month and will remind them that all the benefits of these allowances would continue to flow through to business end-users, as they do now.

"By removing the ability of the leasing industry to claim these allowances, the Government will just make it more expensive for businesses to run greener fleets. There is no logic to it.

"As the vehicle leasing industry trade body you could say that we are biased, but the Committee on Climate Change, the Transport Select Committee and Low Carbon Vehicle Partnership are all in agreement."

With a raft of changes to the business car tax regime due next April, the BVRLA has also urged HM Treasury to provide full details of all transitional arrangements in the draft Finance Bill due to be published on December 11.

Source: Ashley Martin Communications

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