Following the release of the Spring Budget in March, Chancellor Jeremy Hunt has announced several changes that will impact on drivers and businesses that use vehicles and machinery to operate. The Chancellor has promised to eliminate ‘obstacles that restrict firms from investing’.
Here’s a round-up of both the good and not-so-good changes and how they may impact you.
The Good News…
SME Investment Allowance increases to £1m in Spring Budget
The Annual Investment Allowance for smaller firms has increased to £1 million, which allows 99% of all enterprises to deduct the full amount of all investments – like plant machinery or IT equipment – from their annual taxable income. If SME enterprises spend 40% or more of their overall spending on R&D, they will also be eligible to claim an “enhanced credit” worth £27 for every £100 they spend.
100% Capital Allowances on Machinery
Companies now have a 3-year window to claim 100% capital allowances on machinery investments made between now and 31 March 2026 under the Full Expensing scheme. Companies will be able to write off the investment in one go and will receive a tax cut of 25p for every pound of investment. This covers a whole host of vehicles categorised as machinery, including:
- Brand new vehicles
- Vans
- Lorries
- Tractors
- Forklift Trucks
- Pallet Trucks
- Excavators
“This is an exciting opportunity for any business that needs to make large capital investments and helps to keep the cost of doing so down. Of course, Moorgate Finance are here to help finance these investments too and free up more cashflow”
says Adam Drawwater, Commercial Director for Moorgate Finance.
HGV Levy Remains from Spring Budget – July 2023
The Chancellor has also confirmed in the Spring Budget that the HGV levy relaxation – introduced during the COVID-19 pandemic – will remain in place until 31 July 2023 to continue to support the costing and resourcing issues of heavy-goods drivers. This means all HGV’s registered from 1 August 2021 that weigh over 12 tonnes will continue to be exempt from the levy costs normally imposed to cover wear and tear to UK roads.
Prior to the relaxation, HGV drivers were required to pay a time-based charge of up to £1,000 a year for driving a vehicle weighing more than 12 tonnes on UK roads.
Fuel Duty Frozen at 52.95p for Another Year
The government has confirmed as part of the Spring Budget that fuel duty – the tax paid on fuel used to run your car and home – will not be increasing in line with the current rates of inflation. This means that for another year vehicle owners can continue to benefit from the 5p fuel duty cut on petrol, diesel, and biodiesel.
Fuel Duty has been frozen since 2011 when it was frozen at 57.95p a litre. Since then, previous-Chancellor Rishi Sunak slashed fuel duty by an additional 5p in a bid to ease the pressure on motorists, and this lesser price has now been frozen again until March 2024.
£700 million to Tackle Potholes inc. in Spring Budget
In the Spring Budget, the government has committed to tackling the state of UK roads with an additional £200 million added to the previous £500m budget. This additional funding will help local councils to properly maintain their local highways, bridges and drainage systems and is expected to help repair up to 4 million potholes in the UK. The amount of budget each area of the country receives depends on the demand and state of the roads in that area.
This funding is designed to help lower vehicle-maintenance costs for workers, families, and businesses, and will safeguard the country’s road network for the future.
UK Customs System Simplified for Spring Budget
A new streamlined customs process has come into play as part of the Spring Budget to reduce bureaucracy and make it simpler to move product in and out of the UK. These adjustments are designed to ease administration on businesses by giving traders an extra 6 days to complete border crossing forms. They will no longer require as many financial guarantees or authorisations either.
The Increases…
Vehicle Excise Duty (VED) is set to rise in line with inflation rates of 10.1% as of April 2023 for every owner of a can, van, or motorcycle.
The amount of tax you pay will continue to depend on two factors; the date the vehicle was registered and it’s consequent CO₂ emissions. Here’s the breakdown:
- Cars registered on or after 1 April 207 – the first-year road tax range has increased from £10 – £2,365 to £10 – £2,605, while the standard rate is being increased from £165 (2022-23) to £180 (2023-24). Cars with a value of £40,000 or more are required to pay a premium car tax which is now set as £370 (previously £355 in 2022-23).
- Cars registered between March 2001 – April 2017 are being increased to £20 – £695 (prev. £20 – £630 in 2022-23).
- Cars registered before March 2001 with engine of 1549cc or below – increased to £200 (£20 more than 2022-23).
- Cars registered before March 2001 with engine of above 1549cc – tax fee set to £325 as opposed to the 2022-23 rate of £295.
- All fully electric cars registered by 31 March 2025 are exempt.
Whilst a rise in any costs right now is not ideal, if drivers and businesses can benefit from the cost reductions and freezes within Capital Allowances, Fuel Duties and HGV Levy’s then we are confident these reductions can have a bigger, positive impact on UK businesses than an increase in car tax will take away.
Regardless, it has never been more important for a business to have their funding plans in place and Moorgate Finance offer a wide variety of tailored finance options with specific sector knowledge to help your business thrive.
If you have any questions about how the Spring Budget 2023 may affect your business, or to discuss how Moorgate Finance can help to finance your machinery during the Capital Allowances period, please call us on 01908 92 62 62.