Key highlights from the Budget for HGV owners
· No changes to HGV levy or VED
· Fuel duty frozen
· A welcome extension on capital allowances to reduce tax paid by businesses
In his Budget presented on 27 October, Rishi Sunak provided some good news for users of HGVs, suspending the HGV levy for a further year from August 2022 and freezing both HGV VED for 2022-23 and fuel duty. The RHA has been quick to welcome this support for the transport sector. Alongside these extra money is being found to improve both the road system and lorry parks, recognising that the parks in the UK are generally not as good as in other European countries.
Companies will continue to be able to benefit from the capital allowance super-deduction announced in March, which gives a tax deduction for 130% of the cost of investing in new equipment such as commercial vehicles. This is only available on items bought during the period from April 2021 to March 2023, but purchases using HP can qualify whilst spreading the cost over a longer period. The annual investment allowance (AIA) continues to be available to all businesses. It has been around for some years, but the annual limit has changed many times. The current annual limit of £1m has been extended now to 31 March 2023, at which point it is due to reduce to £200k. However, there are some complex calculations to determine the limits applicable to individual businesses in periods when the AIA limit is falling and these may need to be considered carefully to calculate what can be claimed. All businesses should look at how they can take maximum advantage of these allowances.
The Chancellor’s announcements on tax are driven by the political and economic situation. Measures already announced to shore up Government finances were deemed sufficient and remain in place. In particular the main rate of corporation tax will increase from 19% to 25% with effect from April 2023, personal tax allowances have been frozen and there is a new social care levy (initially through increased NI) from April 2022. But these have a cost to businesses, as does the sharp increase in the minimum wage in April 2022 and general inflation, which has increased significantly in recent months and is expected to rise further, before falling back to the Government’s target of 2%. So businesses will continue to face some challenges while we move into better post-pandemic times.
If you would like to find out more about the UK Budget please visit GOV.UK
For more information about the Super deduction you can find a factsheet supplied by the HM Treasury here.