On 19 March 2014, the Chancellor George Osborne set out the future policy of the Government for taxation and spending in the coming years. A summary of the key policy initiatives affecting the automotive retail sector are outlined below:
The introduction of the £2,000 Employment Allowance in April 2014 will support businesses to grow and create jobs, lifting 450,000 employers out of employer National Insurance Contributions (NICs) altogether.
Corporation tax will fall to 21% in April 2014 before reaching 20% in April 2015 – the joint lowest rate in the G20.
Support businesses across the UK to invest and expand by doubling the annual investment allowance to £500,000 until the end of 2015.
To continue to support business investment, the government is doubling the annual investment allowance (AIA) to £500,000 from April 2014 until the end of 2015. This will particularly benefit small and medium sized firms.
The Government will increase the Annual Investment Allowance to £500,000 for all qualifying investment in plant and machinery made on or after 1 April 2014 until 31 December 2015.
The government will extend the period in which enhanced capital allowances are available in Enterprise Zones by 3 years until 31 March 2020.
The government will extend the Enhanced Capital Allowance (ECA) for zero emission goods vehicles to 31 March 2018. To comply with EU state aid rules the availability of ECA will be limited to businesses that do not claim the government’s Plug-in Van Grant.
Business rates support of £2.7 billion for 5 years from April 2014 will benefit 1.8 million ratepayers in England.
In order to provide further support for the lowest income savers, from April 2015 the 10% savings rate will be reduced to 0%. The government will also increase the band of savings income that is subject to the 0% to £5,000.
Income tax -from April 2015 the personal allowance will be increased to £10,500. The higher rate threshold will be increased to £41,865 and the basic rate limit will be set at £31,865.
The adult National Minimum Wage (NMW) rate will increase by 3% to £6.50 from October 2014. There will also be increases of 2% for the youth and apprentice NMW rates rform October 2014.
A tax exemption for amounts up to £500 paid by employers for medical treatments for employees is expected to come available with the rollout of the Health and Work Service in October 2014.
Vehicle Excise Duty (VED) rates for cars, motorcycles and the main rates for vans will increase by RPI from 1 April 2014.
The government will introduce a rolling 40 year VED exemption for classic vehicles from 1 April 2014.
Legislation will be introduced to reduce tax administration costs and burdens by making the following changes with effect from 1 October 2014: motorists will be able to pay their VED by direct debit annually, biannually or monthly, should they wish to do so. A 5% surcharge will apply to biannual and monthly payments AND a paper tax disc will no longer be issued and required to be displayed on a vehicle windscreen.
From 1 April 2014, the government will reduce and re-structure VED rates for HGV’s with the HGV Road User Levy scheme.
From 6 April 2014, legislation will be introduced to: ensure individuals make payments for private use of a company car or van in the relevant tax year AND ensure that where an employer leases a car to an employee, the benefit is taxed as a car benefit rather than as employment earnings.
From 6 April 2015, the Fuel Benefit Charge multiplier for both cars and vans will increase by RPI.
From 6 April 2015, the main Van Benefit Charge will increase by RPI.
The government will consult on reform of the VAT zero rate relief on the supply of motor vehicles adapted for the use of wheelchair users, to seek to better target the relief and reduce fraud, and to ensure that users of lower limb prosthetics can benefit from the relief.
Funding of £85 million will be provided in both 2014-15 and 2015-16 to extend the Apprenticeship Grant for Employers scheme. This will provide over 100,000 grants to employers.
£20 million will be provided over 2 years to support apprenticeships up to postgraduate level.
The Market Investigation Reference powers of the Payment Systems Regulator will be switched on year ahead of schedule. This will give the new payments regulator the power to take completion action over payments systems, as soon as it is equipped to do so.