Spring Budget 2017: Fleet Summary

On Wednesday 8th March 2017, the Chancellor gave his first and last Spring Budget. From now on, the government will present a single fiscal event each year in the autumn.

In this blog, we will summarise the key points for fleet decision makers. Granted, there aren’t many this year which is why many are describing our automotive world as "stable". Let’s take a look at the fleet-relevant headlines.


New Vehicle Tech

The government is investing £270m into new technologies including automotive advancements like driverless vehicles and batteries for electric vehicles. Better batteries will - fingers crossed - give future EVs more range and make them a more viable option for UK business fleets.


Future Diesel Vehicle Tax Changes

The Chancellor has announced that, as part of a scheduled spring discussion to improve UK air quality, “the government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017.”

We had hoped for more clarity on the ongoing diesel cars’ 3% supplement for company car tax, as its abolition has been a flip/flop topic in previous budgets, but it seems we need to wait that little bit longer still.


2017/18 Vehicle Excise Duty Rates

From 1 April 2017, Vehicle Excise Duty (VED) rates for cars and vans registered before that date will increase by RPI.


5G in the UK

The chancellor has also announced that £16m will be spent on 5G mobile technology. The plan is to trial a new 5G network to get the UK’s broadband up to speed. Frank we’d take reliable 3G to start with! In relation to fleet there’s chatter about how this could be an enabler for future connected vehicles, because let’s face it, if we can’t receive text messages strolling down a country lane in 2017, keeping a connected car online on the UK’s roads is a long way off. Still, the government is convinced that is network experiment will help develop commercial options for the UK’s roads. Watch this space.


Improved Transport Networks

The chancellor has pledged £690m to improve local transport networks, although local authorities are already voicing concern over the competitive allocation process.


Company Car vs Cash Allowance Tax Changes

Although not strictly part of the Spring Budget, it's worth noting the imminent changes for company car taxation for those companies offering a cash alternative.

From 6 April 2017, the taxation of company cars for drivers who have chosen to forgo the cash alternative will be changing. Any new company car contracts from 6 April onwards (or contracts which are amended/varied or renewed) will be subject to whichever tax is higher: the employee tax on the cash alternative (which has been forgone) or the benefit in kind on the chosen vehicle. (FYI: BIK being the vehicle's P11D list price multiplied by the appropriate company car tax percentage). This will also affect employers similarly, as they will pay whichever National Insurance Contribution (NIC) is higher.

The Government's idea behind this is that choosing a company car over a cash benefit should not offer a tax advantage.

If the employee tax is higher on the cash alternative, the additional tax (i.e. the difference) will be collected through your payroll's P11D process. A new box for disclosure of the cash alternative will go live in a new 2017/18 P11D form meaning absolutely minimal changes for payroll processes. P46 forms will be refreshed for 2018/19 to support employers’ reporting.

You can download a fact sheet summarising 2017 Company car vs cash allowance tax changes too if you would like to communicate this news with your peers and drivers.


All in all, not a monumental Budget, but there it is. There is lots of (potential) positive change for the fleet industry and UK roads in the coming years. It’s not hang-your-hat-on-it good news, but it’s not bad!

Spring Budget 2017 UK Fleet Summary

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