3 March 2021
The automotive industry was quick to react to the Budget today (Mar 3) with the freeze on fuel duty welcomed but the forthcoming rise in corporation tax unsurprisingly not going down well.
RAC head of policy Nicholas Lyes said: “Drivers will breathe a sigh of relieve that the chancellor has decided not to ‘rock the fuel duty boat’.
“We feared this would only pile further misery on drivers at a time when pump prices are on the rise and many household incomes are being squeezed as a result of the pandemic.
“If the chancellor had raised fuel duty, he could have risked choking any economic recovery as it would have led to increased costs for consumers and businesses.”
Chris Weeks, Director of The National Body Repair Association (NBRA), the only association for bodyshops in the UK, said:
“As a whole, this is positive news for the repair industry. The NBRA welcomes the decision for the furlough scheme to come to a close in September, as this demonstrates the government’s confidence that normal business activity can return to normal before the year is out.
“Bodyshops can retain their much-needed skilled staff to repair cars, until the economy begins to recover, and repairers can get back to doing what they love.”
Business rates holiday
The full business rates holiday will be extended until June, rates will be discounted by two thirds for the following nine months.
Chris added:
“The Business Rates holiday has been a welcomed form of financial support offered by the Government during the pandemic. It is therefore very positive to see that this has been extended, as it will help bodyshops to reduce their overheads.”
Fuel duty frozen
“The fuel duty tax being frozen for another year is also positive news,” said Chris. “NBRA hopes that this will continue to encourage motorists to return to the roads and should support the normalisation of claims volumes.”
Corporation tax and ‘super-deduction’
In 2023 the rate of corporation tax, paid on company profits, will increase to 25%. In addition to the announcement about the corporation tax, the Chancellor has unveiled a ‘super deduction’ tax relief aimed at supporting business investments. For the next two years, businesses will be able to claim 130% of their new “machinery cost” as a tax cut.
“The announcement for corporation tax to increase to 25% was duly expected, considering the significant challenges our economy has been facing,” Chris said. “But the extension for the increase to come into effect from 2023 will hopefully help businesses to get back on their feet.
“The ‘super-deduction’ may well be an excellent opportunity for repairers to invest in new equipment to meet the changes in technology and offset the entire cost against profits.”
Apprenticeships
Apprentice incentive payments will be doubled to £3,000.
Chris said the “NBRA understands that repairers are eager to get apprenticeship schemes going again. The incentive payments will give that extra added support to get this process moving, towards a better and brighter future for the automotive industry.”
SMMT chief executive Mike Hawes said: “Today’s Budget provides some encouragement to an automotive sector hit hard by the pandemic and additional trading costs.
“But it falls short of the support needed to transform the industry and market to the net zero future to which both the government and industry aspire.
“Measures to support investment and upskilling are of vital importance to the sector but more is needed if the government’s green recovery plan is to be a success.’
He added: “Anything that encourages the recruitment of apprentices would have our full support.
“It is encouraging to see the accompanying “Build back Better: Our Plan for Growth” commits to upskilling and the need to address some of the weaknesses of the Apprenticeship Levy, which does not work for many employers.”
Stuart James, chief executive of the Independent Garage Association, said: “We are pleased that financial support for small businesses has been extended in today’s Budget, and thank the chancellor for responding to our request to continue the Retail Business Rate Relief Scheme into the 2021/22 tax year.
“There are hard times ahead for independent garages. A significant decline in MOT work is expected from April to June, where motorists took advantage of the MOT extension last year.
“Garages have also experienced lower volumes of servicing and repair work over the past year due to motorists making fewer journeys.
“Extending the furlough and business rate relief schemes will provide the financial assistance needed to help independent garages through this upcoming difficult period, so they can continue their essential work keeping vehicles in their local communities safe and roadworthy.”