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Autumn
Budget Statement & Spending Review on Wednesday 27th October 2021 The Autumn Budget Statement made in the House of Commons by the Chancellor of the Exchequer, Rishi Sunak MP, on Wednesday 27th October 2021 provided an update on the UK Government's spending plans in the light of emerging evidence since the bulk of the UK’s Covid restrictions were lifted in July and the announcement by the Prime Minister in September of a manifesto breaking tax rise to fund increases in spending on the NHS and social care. The statement was alongside the latest forecasts from the Office for Budget Responsibility (OBR). These forecasts are published alongside the Budget Statement. Budget Statement As usual we have a prompt report on the statement and the measures announced by the Chancellor of interest to classic motoring enthusiasts which is posted here within an hour or so of his sitting down in the House of Commons at 1.35pm. Fuel duty remains frozen for the 12th year in a row - good news for motorists After a freeze for a decade an increase in fuel duty was widely predicted but the planned increase in fuel duty was cancelled. There was also no further increases in Insurance Premium Tax (IPT). The outlook for the 2020 Spending Review from the Institute of Fiscal Studies or OBR data IFS website |
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Autumn Budget 2021 statement and related documents - see the HM Treasury webpages on the Chancellor's Statement & Related documents including the Spending Review 2021. Documents & Annexe A Rates & Allowances Other documents: More & More Institute of Chartered Accountants in England and Wales (ICAEW) - analysis and reaction to the Chancellor's second Budget in 2021. More & More Why capital gains tax reform should be top of Rishi Sunak’s list. Guardian Office of Budget Responsibility (OBR). More What is Insurance Premium Tax? IPT is a tax on general insurance premiums, including car insurance, home insurance, and pet insurance. There are two rates of IPT: a standard rate of 12% and a higher rate of 20%, which applies to travel insurance, electrical appliance insurance and some vehicle insurance. IPT increased over the years - in 1994, the introductory standard rate of IPT was just 2.5%. But over the years IPT has increased, to 6% in 2015, then to 9.5% in November 2015, and in October 2016 it rose by 0.5% to 10%. Today’s rate of 12% means that IPT has doubled in only a few years. How much IPT are you paying on car insurance? Assuming your premiums for a daily driven car and a classic MGV8 are for example £400 and £250 the IPT before today's Autumn Budget Statement would be £78 pa. A 1% increase in IPT would raise that IPT charge by £6.50 pa to £84.50 pa. Fortunately that modest increase did not arise! See our report on fuel duty Posted: 221027 @ 1415 |
Budget
overview - has inflation come back to haunt us? Despite some headline monthly inflation figures well above the Bank of England's (BoE) 2% target and wage increases running at up to 7% in some sectors, it seems that the BoE does not think it is wise to increase interest rates at this point in the economic recovery. With the increase in UK Government debt that the Chancellor has built up during the pandemic, the current BoE base rate means that the cost of servicing that debt is very low by historic standards and the Chancellor will want it to stay that way. However, even if it is clear by October that inflation is set to stay high, the BoE may not put up interest rates immediately: it's quantitative easing campaign will come to an end in 2021 anyway and this is expected to take away some of the inflationary pressures. If high inflation persists into 2022, it seems likely that the BoE will have to act and increase interest rates at some point during the year. Fuel duty frozen for 12th year Amid warnings that fuel prices could stay near record levels over the next few weeks, and following the UK's recent fuel crisis, the Chancellor announced the fuel duty rise has been cancelled for the 12th consecutive year. That's a saving of £1,900 for the average car driver in the UK in that time. Fuel duty has been held at 57.95 per litre for petrol and diesel since March 2011. Motoring groups have backed the fuel duty freeze with Edmund King, the president of the AA, saying "we are on the road to economic recovery, so this freeze on fuel duty helps to keep us on track. The continuation of the fuel duty freeze will be welcomed by the car-dependent, key workers and all businesses that rely on road transport". Road tax changes The VED exemption for cars built over 40 years ago remains and the VED rates for cars over 1,549cc will rise by 5.4% to £295 for the tax year 2022-2023 from the current £280. The rate for cars under 1,549cc are £180 and £170 respectively. So RV8 owners will face a modest increase in their road tax on renewal. UK public warms to road pricing as fuel duty replacement is considered The Government's ban on the sale of new petrol and diesel vehicles from 2030 has made reform of motor taxes an urgent question for the Treasury because the switch to electric cars means almost £30bn in fuel duty raised annually for the Treasury will need to be replaced. But politicians have shied away from introducing road pricing as an alternative, however recent polling for the Social Market Foundation suggests that the conventional political wisdom that voters are opposed to road pricing no longer holds true. Its research found that 38% back road pricing to replace fuel duty and other taxes, with just over a quarter opposed (26%). The sales trend for electric vehicles (EVs) is significant - last month sales of battery electric cars reached a record 33,000, about 15% of all new vehicles sold in the UK in September, including almost 7,000 Tesla Model 3s. But EVs remain a small fraction of all cars on UK roads, currently between 1% and 2% of all cars on UK roads. There was no announcement on this topic. Beer duty on cask beers reduced The Chancellor announced a reduction in duty on cask beer so a very welcome benefit for V8 enthusiasts who enjoy real ales from brewers like Hook Norton. Capital Gains Tax changes Unlike other types of investment assets, the profit you make upon the disposal of a classic car does not generally attract Capital Gain Tax (CGT). This is because cars are generally classed as a ‘wasting asset’ that is estimated to have less than 50 years’ worth of use remaining. A report by the Office of Tax Simplification, published in November 2020, recommended that CGT rates should be increased to bring them into line with income tax. But it would be unlikely to raise significant extra amounts of tax, as it is typically paid by only about 275,000 taxpayers and raises less than £10bn a year. There was no announcement on this topic. Wealth Tax There has been much political discussion about a one-off wealth tax to help pay for the huge debt built up by the UK Government providing various levels of COVID support measures. There was no announcement on this topic. Insurance Premium Tax (IPT) Insurance premiums have the additional cost of IPT, currently 12%. so for motorists the possibility of a rise in IPT rates is a concern. There was no announcement on this topic. |
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