Mini-Budget: Fleet industry reacts to tax cuts

The fleet industry has welcomed a series of tax cutting measures announced by the Chancellor in his mini-Budget on Friday (September 23), but has called on the Government to do more to support fleet electrification strategies.

David Bushnell, director of consultancy and strategy at Fleet Operations, told Fleet News that the “significant tax cuts” will help support business growth and will be welcomed by UK plc, at a time of “burgeoning cost pressures and economic volatility”.

“Kwasi Kwarteng’s decision to permanently keep the annual investment allowance at £1 million is notably reassuring for fleets planning to invest in new technology and charging infrastructure,” he said.

“The decision to freeze Corporation Tax at 19% - for the financial year beginning April 1, 2023 – is also welcomed, but the impact of this must now be factored into fleet budget plans and cost projections.

“Corporation tax relief on the increased rate of up to 25% would ultimately have led to a reduction in fleet TCO (total cost of ownership).”

He continued: “While the energy price cap for domestic households will help encourage the adoption of electric vehicles, the Energy Bill Relief Scheme for businesses will hopefully lead to a reversal of the rapid increase in the cost of public charging – giving further confidence to the EV market.

“It would have been good if the VAT had been recued to the 5% charged on domestic energy.”

Bushnell says fleets are at the forefront of the electrification of transport and many businesses are increasingly having to rely on public infrastructure as they strive to optimise charging strategies and service delivery.

“Over the coming months, we hope to see further action from government that will help accelerate fleet transport decarbonisation and the road to zero,” he added.

Jon Lawes, managing director of Novuna Vehicle Solutions, also welcomed the “headline grabbing” support for businesses, saying it was a welcome boost for the industry.

However, he said: “Despite announcing an intent to accelerate charging infrastructure, no clear plans were laid out to provide new impetus towards the Government’s 2030 targets.

“The number of electric vehicles on the roads continues to markedly eclipse charge point installations, illustrating the necessity for swift action under the new administration.

“Additionally, the discrepancy in VAT on domestic versus public charging threatens to undermine momentum towards EVs. In light of current electricity costs, it was disappointing not to see a VAT reduction introduced within today’s announcements.”

David Savage, vice president for UK and Ireland at Geotab, added: “We’re encouraged to see the plans to accelerate a number of key infrastructure projects, including the Local EV Infrastructure Fund and the Rapid Charging Fund.

“Chancellor Kwasi Kwarteng’s mini-Budget is an encouraging shift in the right direction, particularly with the looming 2030 stop sell date for internal combustion engine (ICE) vehicles. 

Earlier this year, Geotab’s Destination EV - Accelerating Local Authority report found a lack of local investment and awareness regarding EV transition.

Most notably it found that nearly half of English local authorities were unprepared for the switch to EVs amongst their own fleets. 

Savage said: “Local authorities specifically cited limited resources and concerns around charging infrastructure as key inhibitors for EV adoption. This transition needs investment to support local authorities across the country.

“However, there remains a clear need to encourage and accelerate EV adoption.”

Consultancy and channels manager at Alphabet, Caroline Sandall-Mansergh, welcomed "much-needed" support to businesses for energy bills, as well as easing of the fiscal burden on employees with planned reductions for both National Insurance (NI) and income tax rates.

"New Investment Zones also have the potential to create significant opportunities for eligible businesses to leverage a series of additional tax incentives, including plant and machinery and enhanced structures and buildings relief," she said. 

"Businesses play a vital role in expanding the UK’s EV charging network, and whilst companies can currently benefit from the 100% first-year allowance for electric charge-points, we are interested to see how further relief will drive the ongoing development and installation of charging networks.

She continued: "We of course welcome the acceleration of key infrastructure projects and hope adequate funding provisions are made available for decarbonisation within the Local EV Infrastructure Fund and Rapid Charging Fund to facilitate our continued progression towards Net Zero targets.

"However, it’s disappointing that there is still an absence of clarity on BIK rates post 2045/25 and the inequality of VAT treatment between home and public charge points has yet to be addressed.

"We are at a crucial point in EV adoption and if we are to maintain momentum, it’s paramount favourable BIK rates for low and zero-emission vehicles remain past the current cut-off.

"Now is not the time to slow down our efforts and we urge the Government to alleviate uncertainty and enable businesses and employees to plan their future mobility with confidence by setting rates out in the upcoming Autumn Budget."

Gordon Balmer, executive director of the Petrol Retailers Association (PRA), said: “While we are encouraged by the Government’s recognition of this issue through the Energy Bill Relief Scheme, we are concerned that it will not be enough to mitigate the long-term effects of price increases.

“I would urge the Government to extend the six months of support to a year for forecourts as they are essential to the functioning of the UK’s economy. This will give relief to our members and lower the chances of forecourts closures, which could be devastating for many communities who rely on the fuel and food they supply.”

Balmer continued: “By extending relief, the Government can ensure fuel resilience and give the energy market time to stabilise.”

He added: “The reversal of the National Insurance contribution and the corporation tax hike are welcomed by the PRA. This will help our members during these critical times.”