Budget 2023
Harvey D 17/03/2023
Fuel Duty Pot Holes Electric Cars Capital Tax Allowance VED
In last year’s autumn budget, the motorist saw a raft of updates on electric vehicle (EV) taxation, company car taxation, VAT on EV charge points and insurance premium tax (IPT). For the spring budget of 2023, the chancellor focused on funding for potholes and continued freezing of fuel duty.
Potholes
Extra funding of £200m available over the next few weeks will be available to local councils to help resurface and repair country roads and small urban roads.
The RAC head of roads policy generally warmly received this 20% increase in funds. Nicholas Lyes said;
“While welcome, another £200 million is unlikely to make a big difference in the overall quality of our dilapidated local roads”.[1]
Nicolas Lyle, RAC
Mark Morrell, a leading campaigner for better roads, was a little more direct telling GB News;
“ it’s only half of what they cut from this year’s road maintenance budget of £400 million, and with the cost of living and increased cost of materials and labour and fuel is not going to do anything.”
Mark Morrell, Pothole Expert
With the way things are at the moment, at least there is some recognition that we have a problem with our roads; it’s something to build on.
Fuel Duty
The government’s 5P per litre reduction in fuel duty which was due to run out on April 23, will now remain in place for another year; as will the duty freeze, which means drivers will continue to pay the 53p per litre tax. Fuel campaigner Howard Cox of Fairfuel UK said;
“Today’s favourable fiscal announcement will be received very well by motorists, small businesses, low-income families and truckers alike.”’[2]
Howard Cox, Fair Fuel Uk
Vehicle Excise Duty
Vehicle excise duty will be up-rated on the 1st of April 2023 in line with RPI. The Haulage industry will benefit from a VED freeze for HGVs during 2023 -24.
Electric Cars
Unfortunately, electric cars (EVs) did not get a mention in this year’s budget; it was generally expected that new commercial properties would now have the incentive to install electric car chargers.
Currently, there are no Government incentives to make new electric cars more affordable outside Scotland.
Capital Tax Allowance
During the budget, the Chancellor mentioned capital allowances for businesses where capital purchases can be offs offset against taxable profits.
This is something that business users on business contract hire (BCH) have enjoyed for some time. Although the capital allowance of the car cannot be claimed as it is owned by the Lessor (finance Company); As a Lessee and are are one of the following
- Sole trader self-employed
- Partnership
- VAT registered business
- LLP (limited liability partnership)
- limited company
As the Lessee on a BCH* (Business Contract Hire); you can offset your monthly payments against your taxable profits and provide that the car is used for business purposes 50% of the VAT; this can also be reclaimed.
Any maintenance costs are 100% deductible, as is the whole of the VAT element.
*Business Contract Hire only.
Picture Shutterstock 2023 [1] https://www.rac.co.uk/drive/ [2] https://www.whatcar.com/news/spring-budget-what-does-it-mean-for-motorists/n23687