Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers across the UK, comments on the measures announced in today’s (Thursday 17 November 2022) Autumn Statement set by the Chancellor, Jeremy Hunt:

“As a whole, the Autumn budget announced today promises growth and investment that the UK so desperately needs. Whilst there are positive notions in areas such as business rates and infrastructure investment, NFDA is concerned that the removal of tax exemption for EV owners could set back the objective of electrification and increasing the number of electric vehicles sold in the UK, in a bid to reach the ever-challenging 2030 targets.”

Vehicle Excise Duty (VED)

The Autumn Statement has confirmed the anticipated change to Vehicle Excise Duty (VED), whereby electric cars exemption from the tax will expire in April 2025.

Sue Robinson: “The decision made today by the Chancellor to introduce Vehicle Exercise Duty and increase the tax burden for electric vehicles risks disincentivising families from making the transition towards more environmentally friendly vehicle types. Electric vehicles have experienced sustained and substantial growth in market share over the past decade, but there is still a way to go before the market fully matures. This is the latest in a line of reduced financial incentives to adopt electric vehicles.

“Strong incentives and tax exemptions are key to ensuring the UK retains a strong consumer market for electric cars. By removing these policy levers, electric vehicles become less appealing, and adoption will slow. Implementing VED for electric vehicles will create a situation where the least well-off car drivers are deterred from buying a new electric car when the time comes to replace their old one. It sends the wrong message at the wrong time.”

Infrastructure Projects and EV Charge points

The building of public infrastructure such as roads, train lines and communities will be safeguarded by over £600bn in capital investment over the next 5 years. The government will also legislate in Spring Finance Bill 2023 to extend the 100% First Year Allowance for electric vehicle chargepoints to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.

Sue Robinson: “Infrastructure is the foundation on which the UK is built on, the £600 Bn announced in spending for public infrastructure projects is incredibly positive and we look forward to seeing the full details of what this entails for projects that will improve the experience for motorists like roads and charging stations.”

Online Sale Tax

The Government has decided to reverse the idea of Online Sales Tax.

Sue Robinson: “The Online Sales Tax threatened franchised dealers with the possibility of being taxed for their click and collect sales, a prominent feature in present and future operations. NFDA is pleased to hear that our lobbying efforts were successful, the government has decided to scrap the proposed OST. We urged the government not to introduce this complex tax which would disproportionately impact brick and mortar businesses.”

Business rates

The government today, announced it is going further to support businesses by reducing the burden of business rates, providing £13.6 billion of support for businesses over the next 5 years. This includes freezing the multipliers, increasing relief for retail, hospitality and leisure to 75%, and reforming transitional relief on the revaluation by exchequer funding the scheme and abolishing downward caps.

Sue Robinson: “NFDA welcomes the decision to reduce the burden for business by offering further business rates relief, this will be crucial in supporting businesses as they weather the cost-of-living crisis and their long-term recovery from COVID-19.”

Benefit in Kind (BiK)

Rates for vehicles emitting less than 75% of CO2 per kilometre will see an increase in tax of just 1% every year from 2025-2026 until 2027-28, capping the rates at 5% for electric vehicles and 21% for Ultra Low emission vehicles. Rates for other vehicles will be increased by 1 percentage point for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28

“NFDA appreciates the long-term certainty announced today surrounding Company Car Tax rates, especially for electric vehicles. The company car tax market is an important source of new car sales and it critical that this market is incentivised to switch quickly to low and zero emission vehicles.”

National Minimum Wage increase

The Chancellor has announced the largest increase the National Living Wage (NLW) by 9.7% to £10.42 an hour, for those aged 23 and over.

Sue Robinson: “Although the increase to the national minimum wage represents an additional cost for businesses, franchised dealers generally pay the vast majority of their staff above the minimum wage as they continue to source the next generation of skilled workers and invest in their most valuable assets, people”.

NFDA will now take a closer look at the details of the measures announced in the Budget and Spending Review and the implications for our sector.