Tax treatment on diesel vehicles is set to undergo further changes in the Autumn Budget as the government commits to improving air quality, the Chancellor revealed in the Spring Budget.
The government said that it will “continue to explore the appropriate tax treatment for diesel vehicles” after it has drafted a detailed Spring plan outlining the UK’s air quality goals. Companies and fleets may now have to put their diesel vehicle plans on hold until the government has engaged with the relevant stakeholders ahead of the Autumn Budget.
The government’s air quality roadmap continues the substantial reduction in the benefit in kind on low emission vehicles announced during the 2016 Autumn Statement. As previously announced, the government introduced 11 new bands for ultra-low emission vehicles to be rolled out from 2020 to 2021. The government is also investigating the use of red diesel.
Meanwhile, Hammond’s investment into disruptive technology also continued the government’s drive to make low emission vehicles more attractive. The pledged £270m towards tech such as driverless vehicles and artificial intelligence would also help develop batteries for the next generation of electric vehicles.
Vehicle Excise Duty
Elsewhere Vehicle Excise Duty (VED) for cars, vans and motorcycles will increase from 1 April 2017 by the Retail Prices Index (RPI). Hammond also freezed the VED rates for hauliers and the HGV road user levy from 1 April 2017. An update on the existing road user levy will likely follow after the government will explore the current levy. “The government will work with industry to update the levy so that it rewards hauliers that plan their routes efficiently, to incentivise the efficient use of roads and improve air quality,” the government said.
However, some within the haulage industry was left disappointed that the Chancellor did not use the Budget to tackle the “unfair competition” from EU hauliers. Richard Burnett, the chief executive of the Road Haulage Association demanded a rapid review to stop UK hauliers from being treated as “second class citizens”.
“The Chancellor’s refusal to raise the road user levy with an offsetting reduction in VED is a green light for EU hauliers to carry on attacking our industry and getting away without paying their dues for the upkeep of our road network,” Burnett said.
About Richard Hattersley
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