The Spring 2023 Budget was much anticipated, not only by the UK public but businesses across the country. In his statement, Chancellor Jeremy Hunt announced a range of support for families and businesses, which was much needed in the current economic climate.
Energy costs, fuel costs and childcare were primary elements of the upcoming changes. However, what do the recent announcements mean for car leasing businesses and, ultimately, motorists? Below, we take a look at the main takeaways from the Spring Budget 2023.
Road tax increase
One area that affects both car leasing companies and motorists is the increase in Vehicle Excise Duty (VED). This goes up yearly alongside the Spring Statement, and from 1st April 2023, road tax will increase to £180.
The first-year road tax rates are also going up. But zero-emissions cars still pay nothing at present. There’s also a slight increase in low-emission vehicles for the first-year tax rate.
In addition, the premium tax rate charged on cars costing over £40,000 is also increasing. The current rate is £355 per year between years two and six. But this is going up to £390 per year from 1st April 2023.
Individuals and businesses will feel the increases in VED. In addition, car leasing companies that include road tax within contracts will also see an increase, which may lead to additional costs added to leasing agreements.
Investment opportunities
The automotive sector has long been requesting additional support and investment to boost the industry, particularly after the effects of the pandemic.
The Spring Statement brought some good news for this area, with tax breaks for capital expenditure and investment zones, which would include automotive R&D, particularly towards greener mobility.
However, a statement released by the Chief Executive of the SMMT, Mike Hawes, highlights that the UK is hard-pressed to compete with the support packages other places see. So while some aspects of the Spring Budget are welcomed and positive news for the sector, the omitted factors, such as boosting EV uptake or cutting VAT at electric charging points, don’t mirror these efforts.
Fuel duty frozen and discounted rate extended
Another highly anticipated area for motorists included fuel duty. This has been frozen since 2011 at 52.95p, and moving forward, Jeremy Hunt announced this would stay the same. Last year also saw a 5p discount on this rate, and this will continue to hold for another 12 months, meaning the rate will remain at 47.95p.
With fuel prices fluctuating widely in recent years, this comes as a relief for motorists – especially as the rumoured increase was said to be 11p.
Electric vehicles
Surprisingly, there was no mention of changes in support level for the EV sector or wider infrastructure. The industry has called for more funding in this area to boost electric vehicle uptake, particularly in the commercial sector.
There was speculation that an announcement may be made regarding installing electric charge points in all commercial properties. But this was not confirmed.
However, businesses can still make use of the plug-in car grant for commercial vehicles such as vans, trucks and taxis. Still, other initiatives are being called for to make transitioning to electric more accessible for everyone.
Energy costs
The rising costs of energy have affected households and businesses. In this announcement, the extended Energy Price Guarantee provided some relief for families from the expenses rising significantly over the next few months. But what about the commercial sector?
The Chancellor said there would be long and short-term measures to help reduce businesses’ energy costs. In addition, the focus on green energy was prevalent. Hunt announced “I will extend the Climate Change Agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures”.
While it’s unclear how this will help all businesses, the Energy Bills Discount Scheme, intended to stop in March 2023, will now go on for a further 12 months.
Those on a non-domestic contract (eligibility criteria apply) receive a discounted rate on gas and electricity unit prices. Many businesses can continue to see this benefit over the next year, which is hoped to help reduce costs in many types of companies, including leasing dealerships.
Road repairs
Almost all drivers have experienced poor road conditions, and potholes have become a regular feature on UK roads. However, in the Spring Statement, the Chancellor announced more funding towards repairing potholes, with more funding to local councils for general street maintenance.
The emphasis will be to resurface roads rather than cover them up and hope for the best. This will help not only motorists but also car leasing companies and dealerships that may be seeing increased repairs required during and at the end of a lease contract.
Cost-effective motoring solutions at Leasing Options
The Spring Budget has set out ways to help households and businesses. Over the next few months, the plans will highlight how this may save people money and grow the economy.
While there has been no specific announcement on how these plans will affect the car industry, buying a vehicle outright is still a significant investment. In addition, there’s no current incentive to transition to electric. Leasing an EV is an excellent option if you're considering the switch.
Leasing a car gives you the freedom to choose from a range of top models. Plus, road tax is included. There’s also the option to add a maintenance and servicing package or utilise our Fuel & Go insured leasing option. With everything included in the contract cost – all you need to do is fill up or charge and drive! It’s a great way to save costs and get the best deals.
If you have any questions about car leasing or want to check out the latest offer, don’t hesitate to get in touch with our team.
