Chancellor Jeremy Hunt has announced a further 12 month freeze on Fuel Duty, maintaining the temporary 5ppl cut introduced by then-Chancellor Rishi Sunak last year in reaction to the cost of living crisis.
After the Autumn Statement, there was concern that Fuel Duty may be raised by up to 12p – a combination of abandoning the 5ppl cut and inflation. Paul Holland, Managing Director of UK Fleet, Allstar Business Solutions, says the Government has made a sensible decision to not increase duty.
“It’s good news that Fuel Duty has remained frozen,” Paul Holland said. “In maintaining the Fuel Duty cut, the Government clearly recognises that for many businesses and drivers the high cost of petrol and diesel continues to hit them financially, and so retaining the status quo is to be welcomed.
“However, we do expect the price at the pump to continue to fall. The cost of a barrel of oil is below its lowest point in 2022, but retail prices remain higher. Given this, we believe pump prices will drop by between 10-15p in the near future, should oil prices fall further, or remain at current levels. If and when this comes into play, it will be another benefit for fleets during the current tough economic conditions.
“Another 12 months of certainty on Fuel Duty helps fleets to budget, and at Allstar, we believe that by combining this with clever procurement strategies and proactive fuel economy measures, 2023 should at last be a year where businesses are able to see their fuel bill dropping, particularly after the highs of 2022.”
Businesses buying vans or trucks will be able to take advantage of ‘full capital expensing’ for the next three years.
This means that every single pound a company invests in vans/trucks (but not cars), IT equipment, office equipment, plant or machinery can be deducted in full and immediately from taxable profits.
The Treasury said it will encourage investment by almost 3.5% in 2024-25 and 2025-26, adding: “The full expensing capital allowance announced in the Spring Budget aims to incentivise firms to bring forward investment and thereby boost the level of business investment in the next few years.”
On top of the £500 million ‘Pothole Fund’ allocated in the Autumn 2021 Spending Review, the Chancellor has added a further £200 million extra for England.
“Damage from potholes is a serious, ongoing concern, for many fleets, and so further investment to repair as many of these as possible is needed,” said Paul Holland.
“Not only is damage from potholes expensive in terms of replacing or repairing tyres and wheels, it costs companies a fortune in unplanned downtime, as they have to schedule repairs, reschedule the working day, or even hire in replacement vehicles.
“In that sense, there is a marked return on investment in eradicating this needless hindrance to businesses, and we encourage the Government to continue to invest in the maintenance and upkeep of our vital road network.”
In the Budget, the Treasury said it expected energy prices to fall this year, which would bring relief for fleets and drivers running electric vehicles.
It said: “Inflation has been lower than the OBR expected in its November 2022 forecast; wholesale energy prices in 2023 are now forecast to be £1.50 per therm, less than half the £3.40 per therm assumed at the November 2022 forecast, and supply chain pressures have continued to ease. Despite this, inflation remains elevated across advanced economies.”
While the announcement of a continuation of the Energy Price Guarantee for a further three months may help those drivers charging at home manage costs, Jeremy Hunt also said the Government is “supporting investment in the energy system by launching Great British Nuclear to support new nuclear builds, making up to £20 billion available for Carbon Capture, Utilisation and Storage (CCUS), and extending the Climate Change Agreement scheme for a further two years to encourage energy efficiency.”
Fleets are increasingly able to monitor how green the power their electric vehicles are using, and many are also now reporting their carbon intensity through the Streamlined Energy & Carbon Reporting scheme.
“The UK needs a long-term strategic plan for energy security and cleaner production,” said Tom Rowlands, Managing Director, Global EV Solutions, Allstar Business Solutions. “Simply using electricity to power vehicles isn’t enough if the energy isn’t green… new, cleaner forms of energy, as well as carbon capture, are necessary and so any investment which helps achieve this is to be encouraged.
“We know that fleets are very interested in how green the power they use is, and as we all move to a Net Zero future, investments such as those announced in the Budget are essential.”
Paul Holland also added: “I feel there is a missed opportunity in the relative lack of mention in the budget on electric vehicles. EVs can cost significantly less to fuel than fossil fuel vehicle, so encouraging more fleets to adopt them would save businesses as a whole far more money. Previous years have seen generous subsidies for buying new EVs and installing chargers, but these have largely been discontinued. Although the growth of EVs has been rapid they currently only represent 16.5% of new vehicles coming onto the road, and it may have been a perfect time to drive further momentum towards the electrification of the UK’s fleets.”
Confirmation of the reintroduction of the HGV levy in August
VED to rise in line with RPI (except for HGVs) from April
Visit all the details in the 2023 Spring Budget here.