Broker Budget summary

There were several areas where brokers will feel new Chancellor Rishi Sunak has helped the leasing broker industry.

Plug-in Car Grant

The PICG has been retained to at least 2022/23 to encourage the switch to zero emission cars. However, it has been cut to £3000.

Ashley Barnett, head of fleet consultancy at Lex Autolease, said:

“We welcome the government’s decision to keep the plug-in car grant in place until at least 2022/3. As plug-in vehicles move towards parity with traditionally-fuelled vehicles, government funding can be reduced and ultimately phased out.  This is an important, positive moment on the UK’s Road to Zero journey.”

Also in the Budget was £500 million investment in the charging hub roll-out for electric vehicles.  Nexus Vehicle Rental CEO David Brennan added:

“It has been clear for some time that the UK’s infrastructure requires further support to propel businesses and consumers towards the adoption of greener mobility solutions. Until this improved EV infrastructure is in place, we also welcome the continued freeze on fuel duty.”

Company car tax rates

Hand in hand with the PICG was the confirmation of company car tax rates that commence on April 06, 2020. These include a 0% rate for zero emission cars.

Eduarda Thomas, principal consultant at Lex Autolease, said:

“The publication of company car tax rates beyond 2023 is a hugely welcome shot in the arm for the fleet market and gives decision makers the clarity they need to invest in greener fleets now.  Fleets typically plan in 5-10-year cycles, and confident purchasing decisions cannot be made without sight of future tax liabilities. We are optimistic that the lack of clarity in recent years is behind us and hope that five-year visibility is maintained in the years to come.”

And Morris also added:

“Tucked away in the budget were also assurances that the current Benefit in Kind rates, which made it significantly cheaper to run an electric vehicle, will be maintained for the next three years. Taken together these measures provide much needed certainty and should encourage the earlier uptake of ULEVs, particularly in fleets, and help the Government meet its CO2 targets.”

No VED for zero emission cars + £40k

Welcome also was the removal of the expensive VED surcharge for electric vehicles over £40,000, which should help monthly leasing rentals of the more expensive EV rentals. 

Lex Autolease’s Ashley Barnett added:

“Removing the VED surcharge for EVs will encourage uptake, many of which have list prices higher than the £40,000 threshold.  The threshold was put in place to identify and apply a surcharge to ‘luxury’ cars, but as times have changed, even entry-level models featuring the newest, cleanest engine technology can come with a similar price tag.  It’s positive that early adopters of EVs are being incentivised by these changes, rather than being penalised by an outdated tax system.”

Freeze on fuel duty

While this is “for now”, it will certainly benefit brokers trying to sell rentals on standard petrol and diesel cars, along with hybrids. For many consumers, the switch to electric is too expensive or not practical so this will assist them in the short term.

Nigel Morris, tax director at MHA MacIntyre Hudson, commented:

“The Fuel Duty freeze was the right move given the Coronavirus situation. Coupled with a reduction in the price of petrol this should mean more money in people’s pockets. Eventually the freeze will have to go, and the revenue saved should be used to fund the transition to low emission vehicles and infrastructure, but the Chancellor was correct to refrain from taking this step now.”

Business rate holiday for retailers

Brokers should benefit from this where the rateable value of their premises is less than £12,000. The Chancellor announced that there will be no rates to pay.

Support for staff sick with coronavirus

Statutory Sick Pay (SSP) will be paid to those who have to self-isolate because of COVID-19.  Meanwhile, SME employers will be able to reclaim two weeks’ SSP if it’s due to COVID-19.