The Government announce air quality plan to reduce roadside Nitrogen Dioxide

The Chancellor of the Exchequer Phillip Hammond today delivered his first Autumn Budget, with diesel vehicles, plug-in cars and the environment high on the agenda.

5 key points from the budget that affect fleet:

1) Benefit-in-Kind Diesel Tax Supplement for cars will increase 1%, from 3% to 4%, from 6 April 2018. Diesel vans are exempt from this change. Next-generation diesel cars that meet emissions limits in real driving conditions (known as Real Driving Emissions Step 2 Standards) are exempt from paying the diesel tax supplement.

2) A new Vehicle Excise Duty supplement will apply to new diesel cars first registered from 1 April 2018. Diesel vans are exempt from this change. This change will also not effect next-generation diesel cars that meet emissions limits in real driving conditions (known as the Real Driving Emissions Step 2 standards).

3) The petrol and diesel fuel duty rise has been frozen.

4) From April 2018, there will be no benefit in kind charge on electricity that employers provide to charge employees’ electric vehicles.

5) The Government announced £400m for a charging infrastructure fund, an extra £100m for Plug-on car grants, and £40m in charging R&D.

Our thoughts

Pendragon Vehicle Management welcomes the additional funding for plug-in technology and cleaner vehicles, as well as the news that there will be no BIK due on electric vehicles charged at work. We are very pleased to see environmental policy so high on the Government’s agenda, and that commercial diesel vehicles are exempt from any increased tax treatment.

Further clarification is expected in the full budget report and Pendragon Vehicle Management will provide an analysis over the next few days.

Neal Francis, Divisional Managing Director for Pendragon Vehicle Management said:

“We are pleased to see the investment being made in electric vehicles, particularly in relation to no BIK being levied on electric charging in the workplace. The amount of investment stated is still relatively small, given the total number of cars on the road in the UK today. These investment commitments are at odds with the aggressive increases in BIK electric car drivers continue to endure. The earlier rises in BIK announced for drivers of electric vehicles will we believe limit the adoption of these vehicles in the near term and therefore whilst this policy remains in place we continue to see the take up of electric vehicle technology being a gradual trend, rather than that of a seismic shift to electric technology.

Over the coming days we will calculate the Whole Life Cost impact of the taxation changes intended for diesel, however our previous analysis has found diesel to still be the most cost-effective solution for most fleet operators and our initial view is today’s announcement will do little to impact that in the short term”

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