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 (Wednesday 15 March 2023) Budget delivered by the Chancellor, Jeremy Hunt.
“The Spring and Autumn Budgets, delivered by the Chancellor, are pivotal moments in the year for the Government to outline their priorities and areas of importance. Today, it's positive to see that government has addressed some key areas which impact the automotive sector, including maintaining the fuel duty freeze and the replacement of the super deduction tax with a new investment allowance scheme.
“However, it is clear that Government still does not entirely understand the significance of incentivising motorists’ transition to electric and investing into charging infrastructure. NFDA urges government to place more emphasis on financing and levelling up the electric vehicle landscape, matching the efforts and investments franchised dealers have made, and continue to make, if they want to meet their ambitious 2030 deadlines and 2050 net-zero targets.”
Corporation tax hike
The Chancellor has confirmed that corporation tax will rise to 25 percent, from 19 percent.
Sue Robinson: “Ultimately, we are disappointed that the Chancellor has not reversed the corporation tax rise to 25%. Keeping corporation tax at 19% would have helped franchised dealers to maintain the high levels of investment required to support the electrification of their vehicle stock another example of franchised dealers supporting government’s net-zero targets. This transition has forced dealers into levels of investment which has not been seen in the industry in decades.
Investment Incentive
Government is now introducing full expensing from 1 April 2023 until 31 March 2026. This means that companies across the UK will be able to write off the full cost of qualifying main rate plant and machinery investment in the year of investment.
Sue Robinson: “NFDA cautiously welcomes the replacement of the super-deduction with a new investment allowance scheme. This involves a 100% write-off of capital expenditure expenses immediately from profits. In some circumstances, the deduction may facilitate greater investment by dealerships, but this does not make up for the disincentive to invest as a result of the rise in corporation tax.”
Fuel duty frozen
The 5p fuel duty will be frozen for a further 12 months, until March 2024.
Sue Robinson: “NFDA supports the Chancellor’s decision to maintain its freeze on fuel duty, supporting UK motorists considerably. Fuel costs are still yet to return to pre-pandemic levels and costs the average vehicle owner between £1,300 and £1,800 annually. Fuel has now become a key expenditure for families in the UK and any increase would have had detrimental impacts on family finances, especially in rural areas where public transport is not a viable alternative.
“This is something we pushed for in our Budget Submission earlier this year and we welcome the Chancellor’s decision.”
Electric roll-out
Sue Robinson: “We are extremely disappointed that not a single mention of electric vehicles or charging infrastructure was mentioned in today’s budget announcement. If the UK Government’s goal is to stop the sale of new petrol and diesel cars and have 300,000 charge points in place as a minimum by 2030, there needs to be much more significant investment – and this has to be incentivised by the Chancellor in future Budgets.
"The recent announcement to introduce Vehicle Exercises Duty (VED) for electric vehicles in 2025 has reduced the appeal of buying a new electric car as motorists will no longer benefit from a tax-free purchase that differentiated it from its Internal Combustion Engine (ICE) counterpart. This sent the wrong message at the wrong time and the Chancellor still has not established a policy on electric vehicles that sends the right message. Today, NFDA believes, was a missed opportunity to create a comprehensive road tax scheme.
“Going forward, Government support will be critical to the success of the electrification of the vehicle parc in the UK. Government’s neglect to support the less affluent from purchasing an EV, a product which remains a price premium and a significant barrier to adoption, risks undermining the movement and their net-zero targets and destabilising the EV market.”
Skills shortage and Apprenticeship Levy
Sue Robinson: “We have continuously called on the Government to rethink the apprenticeship levy scheme and it is a disappointment that nothing has been announced on this, or for apprenticeships for young people in general. Businesses need help to source talent and promote employment into such a vital sector for the UK economy.”
ENDS -
NOTES TO EDITORS –
Adam Weeks, NFDA Communications Officer
Direct: 020 7307 3413
Mobile: 0788 003 9897
Email: adam.weeks@rmif.co.uk
