Autumn Budget 2017

On Wednesday 22 November 2017, the Chancellor of the Exchequer, Phillip Hammond, delivered the 2017 Autumn Budget to Parliament. This marked the shift in the timing of the annual budget, which had been delivered in the Spring since 1997.

Below are the most pertinent points of interest to RMI and its members:

Preparing for EU Exit

  • The Budget sets aside a further £3 billion to ensure that the government can continue to prepare effectively for EU exit. £1.5 billion of additional funding will be made available in each of 2018‑19 and 2019‑20.

Transport Tax

  • Fuel duty – Fuel duty will be frozen for an eighth year in 2018-19. Fuel duty freezes since 2011 will have saved the average driver a cumulative £850 by April 2019, compared to what they would have paid under the pre-2010 escalator plans.
  • Alternative fuels – The government will review whether the existing fuel duty rates for alternatives to petrol and diesel are appropriate, ahead of decisions at Budget 2018. In the meantime, the government will end the fuel duty escalator for Liquefied Petroleum Gas (LPG). The LPG rate will be frozen in 2018-19, alongside the main rate of fuel duty.
  • Air quality – In support of the National Air Quality Plan published in July, the government will provide £220 million for a new Clean Air Fund. This will allow local authorities in England with the most challenging pollution problems to help individuals and businesses adapt as measures to improve air quality are implemented. The government is launching a consultation alongside Budget on options that could be supported by this fund. This will be paid for by:

- a Vehicle Excise Duty (VED) supplement that will apply to new diesel cars first registered from 1 April 2018, so that their First-Year Rate will be calculated as if they were in the VED band above. This will not apply to next-generation clean diesels – those which are certified as meeting emissions limits in real driving conditions, known as Real Driving Emissions Step 2 (RDE2) standards.

- a rise in the existing Company Car Tax diesel supplement from 3% to 4%, with effect from 6 April 2018. This will also apply only to diesel cars which do not meet the Real Driving Emissions Step 2 (RDE2) standards.

VED - The government will:

  • increase in line with RPI from 1 April 2018 VED rates for cars, vans and motorcycles registered before April 2017 and the First-Year Rates for cars registered after April 2017.
  • freeze the Heavy Goods Vehicle (HGV) VED and Road User Levy rates from 1 April 2018. A call for evidence on updating the existing HGV Road User Levy will be launched this autumn. The government will work with industry to update the Levy so that it rewards hauliers that plan their routes efficiently, to encourage the efficient use of roads and improve air quality.
  • from April 2019, exempt zero-emission capable taxis from the VED supplement that applies to expensive cars, consulting in advance on how to define such taxis.
  • Company cars – The Fuel Benefit Charge and the Van Benefit Charge will both increase by RPI from 6 April 2018.

Next Generation Vehicles

  • Ultra-low emission vehicles – To support the transition to zero emission vehicles, the government will regulate to support the wider roll-out of charging infrastructure; invest £200 million, to be matched by private investment into a new £400 million Charging Investment Infrastructure Fund; and commit to electrify 25% of cars in central government department fleets by 2022. The government will also provide £100 million to guarantee continuation of the Plug-In Car Grant to 2020 to help consumers with the cost of purchasing a new battery electric vehicle.
  • Connected and Autonomous Vehicles (CAVs) – The government wants to see fully self-driving cars, without a human operator, on UK roads by 2021. The government will therefore make world-leading changes to the regulatory framework, such as setting out how driverless cars can be tested without a human safety operator. The National Infrastructure Commission (NIC) will also launch a new innovation prize to determine how future roadbuilding should adapt to support self-driving cars.
  • Benefits in kind: Electric Vehicles – From April 2018, there will be no benefit in kind charge on electricity that employers provide to charge employees’ electric vehicles.

Business Rates

  • In light of the recent rise in inflation, over the next 5 years the government will provide a further £2.3 billion of support to businesses and improve the fairness of the system in England, by:

- bringing forward to 1 April 2018 the planned switch in indexation from RPI to the main measure of inflation (currently CPI).

- legislating retrospectively to address the so-called “staircase tax”. Affected businesses will be able to ask the Valuation Office Agency (VOA) to recalculate valuations so that bills are based on previous practice backdated to April 2010 – including those who lost Small Business Rate Relief as a result of the Court judgement. The government will publish draft legislation shortly.

- continuing the £1,000 business rate discount for public houses with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties, for one year from 1 April 2018.

- increasing the frequency with which the VOA revalues non-domestic properties by moving to revaluations every three years following the next revaluation, currently due in 2022. To enable this, ratepayers will be required to provide regular information to the VOA on who is responsible for business rates and property characteristics including use and rent. The government will consult on the implementation of these changes in the spring.

  • Local government will be fully compensated for the loss of income as a result of these measures.

Labour Market Productivity

  • The government will also accept all of the LPC’s recommendations for the other NMW rates to apply from April 2018. For youth rates, this represents the largest increase in 10 years. The recommendations include:

- increasing the rate for 21 to 24 year olds by 4.7% from £7.05 to £7.38 per hour.

- increasing the rate for 18 to 20 year olds by 5.4% from £5.60 to £5.90 per hour.

- increasing the rate for 16 to 17 year olds by 3.7% from £4.05 to £4.20 per hour.

- increasing the rate for apprentices by 5.7% from £3.50 to £3.70 per hour.

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