NFDA comments on Budget 2021

The National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers in the UK, reacts to the Autumn Budget and Spending Review 2021.

Sue Robinson, NFDA Chief Executive, comments on the announcements made by the Chancellor.

Business rates

The Chancellor has announced a number of measures in line with the requests previously made by NFDA in its spending review submission and consultation response. These include a one-year 50% discount up to £110,000 on business rates for retail, leisure and hospitality businesses and a new improvement relief for investment in green technology.

Additionally, in line with NFDA’s requests: the business rates system will be evaluated every three years; the Valuation Office Agency will receive a substantial increase in funding and next year’s Business Rates Multiplier will be cancelled.

Sue Robinson commented: “NFDA called for more frequent business rates revaluations, a review of the multiplier as well as an extension of the Business Rates Discount: it is extremely positive that the Government has taken on board all our recommendations.

“The business rates discount will be crucial to continue to support businesses as they complete their recovery. Going forward, we will continue to liaise with the relevant departments to go further in addressing the imbalance between online tax and the rates paid by businesses relying primarily on their physical presence such as vehicle dealerships”.

Fuel Duty Freeze

The fuel duty freeze will remain in place.

Sue Robinson said: “As people’s reliance on cars continues to increase, it is positive that fuel duty will remain frozen for another year, supporting motorists through a period of financial pressure”.

Transport Infrastructure

A £21bn package to improve the road infrastructure has been announced.

Sue Robinson: “An efficient and secure transport network is a vital component of the economy of the UK. We welcome the Government’s investments into the UK’s road infrastructure, which will benefit the movement of goods and people across the country”.

Annual Investment Allowance and Super Deduction Tax

The £1m Annual Investment Allowance will be extended to March 2023 instead of ending in December as originally planned.

Sue Robinson: “The extension of the Annual Investment Allowance, coupled with the super deduction tax, will continue to support franchised dealers’ investments as they upgrade and improve their premises to meet the evolving consumer demand”.

Skills

There will be a £3.8bn increase in skills spending including a £2.7bn increment for apprenticeship funding in 2024/25.

Sue Robinson: “Apprentices are an essential resource for the automotive industry, one that continuously invests to create opportunities for the workforce of the future and upskill current staff. It is encouraging to see that the Government is committed to supporting the development of apprenticeships in response to the demand for new skills. However, we are disappointed that the Government has not considered our recommendation to extend the window in which employers can use unspent levy funds by 18 months”.

National Insurance Increase

From April 2022, the Government will introduce a 1.25% rate hike in National Insurance Contributions.

Sue Robinson: “The rise in National Insurance will disproportionately affect small and medium-sized franchised dealer groups. It is important that businesses continue to be supported as they are faced with vehicle supply issues and difficulties in attracting talent, resulting in staff shortages”.

National Minimum Wage increase

The Chancellor has announced increases to the national minimum wage for people over 23 to £9.50 an hour.

Sue Robinson: “The increase to the national minimum wage does represent an additional cost for businesses, however, franchised dealers generally pay the vast majority of their staff above the minimum wage as they continue to invest in their most valuable asset, people”.

NFDA will now take a closer look at the details of the measures announced in the Budget and Spending Review and the implications for our sector.