Chancellor Philip Hammond has presented his Spring Budget. We’ve picked the measures we feel will most affect commercial motorists and their businesses.
Surprisingly for a Conservative government most economic experts have criticised their budget for being harmful to business.
The insurance sector, still reeling from the affects of the recent “Discount Rate” ruling, breathed a sigh of relief as insurance premium tax (IPT) was also left alone – the first time in 3 budgets.
However not all industries were spared in the Chancellor’s financial shake up.
Society of Motor Manufacturers and Traders
With van sales down 4% in February and jobs at Vauxhall car plants seriously under threat the industry was looking for support. Mike Hawes, chief executive of the SMMT said,
“The chancellor hasn’t prioritised additional funding for supply chain development, nor addressed the flaw in business rates that disincentivises investment in plant and machinary.”
Many car traders were disappointed not to see the introduction of a diesel scrappage scheme to help stimulate sales interest. Larger companies are also due to be hit with the apprenticeship levy, a rise in the minimum wage and increased inflation.
Self employed taxi and chauffeur drivers
It’s good news on the fuel duty front with no rise. However there’s bad news for the self-employed drivers with national insurance contribution increases and a reduction in tax free share dividend.
It was a kick in the teeth for millions of workers who don’t enjoy the benefits of sick pay, paid holidays and the job security of being employed. Lower tax rates have traditionally been seen as a reward for the extra risks associated with being entrepreneurial. Its estimated that a taxi driver earning approx £18,000 will be £20 worth off. Anyone fortunate enough to be earning £51,000 will be roughly £600 worse off.*
Many professional taxi and chauffeur drivers will also ask whether £690 million is enough to increase the speed of traffic in the UK’s major cities? Currently London’s congested roads run slower than a horse and cart.
Take a look at our selection of key budgetary policies below. If you have the time we’d love to hear your thoughts:
The tax rate applied to fuel purchases has been left at its current rate. This may be in a large part due to the forecasted rise in inflation to 2.4% in 2017-18 and the fact a litre of petrol has increased by 20% in the last 12 months.
Vehicle excise duty for hauliers and HGV road users has also been frozen.
Changes to vehicle tax announced previously are already due to hit on April 1st so there was no additional news on this front.
Spending of of £90m in the north of England and £23m for the Midlands allocated to tackle pinch points roads.
Plus £690 million for local authorities across England to tackle urban congestion.
£270m to spur the development of new technologies such as robots and driverless vehicles.
Those in the motor trade and engineering sectors may be pleased to see the chancellor’s plans to launch T-Level qualifications.
The aim is to give technical education equal prestige as academic courses. The number of hours of training for technical students aged 16 to 19 will be increased by more than 50%. This will include high-quality, three-month work placements.
Technical students will also have access to student loans as per students at university. It will be interesting to see how this plan works alongside National Apprenticeship schemes.
£435m is to be set aside for firms affected by increased business rates following the recent rate reappraisal.
A £300m hardship fund will be available for small businesses worst affected by the changes. Any business losing existing relief will have their rise capped at no more than £50 a month.
Helen Dickinson, CEO of the British Retail Consortium described this amount as, “A drop in the ocean compared to the £25 billion a year the tax raises.” She criticised the government for not looking to reduce what she described as,”An unsustainable property tax – higher here than anywhere in the developed world.”
Self-Employed National Insurance
Controversially there will be a 2% increase in Class 4 NI imposed on the self-employed by 2019. The level will rise from 10% to 12%. Those on average earnings of £12,700 will benefit by £70. But it’s estimated that changes to NI will cost every self-employed person on average 60p more a week in tax.
Its argued by many that this increase breaks a key Tory election manifesto pledge.
Tax-free share dividend allowance will be reduced from £5,000 to £2,000 from April next year.
Those in construction and related sectors will be pleased to note budget allocation for a 110 additional new schools and £260 million redevelopment of existing ones.
Free school transport is to be extended to include all pupils on free school meals at a selective school. So there could be new or enlarged school contracts in the offing for public and private drivers.
Since this blog post was written the Chancellor has announced, in a dramatic u-turn, that National Insurance will not be raised during the current Parliament. Whilst explaining the decision he said: “It is very important both to me and to the prime minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.” “In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.”