 Posted: 230313 |
Spring
Statement will be on Wednesday 15th March 2023 Chancellor Rishi Sunak will make his Spring Statement on Wednesday 15th March 2023 to the House of Commons responding to the next forecast for the economy and public finances he commissioned the Office for Budget Responsibility (OBR) to prepare for publication on Wednesday 23rd March. The Chancellor's statement will need to consider the economic and fiscal outlook in the light of emerging evidence since the bulk of the UK’s Covid restrictions were lifted and the announcement by the Prime Minister of a manifesto breaking tax rise to fund increases in spending on the NHS and social care. The Spring Statement will start at 12.30pm after Prime Minister's Questions and it's expected to last for a maximum of an hour. As usual we will have a prompt report on the statement and the measures announced by the Chancellor of interest to classic motoring enthusiasts which will posted here within an hour or so of his sitting down in the House of Commons. What could we see of interest to classic car enthusiasts? We hope the freeze on fuel duty will continue and also that there will be no further increases in Insurance Premium Tax (IPT). With the rise in the cost of motor fuel because of the Russian Ukraine invasion and the sanctions applied by the UK, EU, USA and many other countries, there has been considerable pressure on the Chancellor to reduce fuel duty and related taxes and/or the VAT on them. |
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Breakdown of the price of standard petrol in UK  Photo credit: The Times Update: 230313 |
Spring
Statement review - serious concerns over inflation and the
rise in the cost of living With the combination of the rises seen in energy costs, National Insurance bills rising from April and motor fuel costs , the spiralling cost of living in the UK will continue pushing the headline monthly inflation figures well above the Bank of England's (BoE) target. Pressures for wage increases are seen in many sectors. Fuel duty Although motor fuel prices have fallen considerably since the last Budget uncertainties over resumed rises from the effects of the continuing war in Ukraine, there will be continuing strong pressure for not only continuing the fuel duty freeze (it has been frozen for 12 years) but also pressure for cutting the rate of fuel duty and associated taxes and VAT thereon. It's worth noting that without any reference to an extension from the Chancellor the fuel duty freeze will automatically end. That's because existing legislation around fuel duty stipulates how much it goes up by each year. Fuel duty is 57.95p per litre of petrol or diesel in the UK and the rate has been frozen for 12 years by successive Conservative chancellors. UK public warms to road pricing - reform of motor taxes With an increasing rate of take-up of electric cars and the retirement of petrol and diesel cars - so measures for replacing fuel duty are likely to appear in a Budget at some stage. 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 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 rest were open to persuasion, the SMF said, and shared a strong public perception that fuel duty was a heavier burden than other taxes. The sales trend for electric vehicles (EVs) is significant but EVs remain a small fraction of all cars on UK roads. Concerns over the roll out of sufficient charging points to meet the needs of the ban on new petrol and diesel vehicles by 2030 are growing. VED exemption for classic cars The rolling 40 year exemption will hopefully not be removed but it's unlikely efforts to get it extended to a rolling 30 year concession will be considered at this time by the Chancellor. More 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. Even if the vehicle remains in existence for a period in excess of those 50 years, the same exemption applies. The tax is paid when people sell assets such as shares or a second home. There are rumours that the current CGT rates may be tinkered with and it's been suggested that CGT rates could be aligned more closely with income tax rates, which could mean scrapping the current CGT rates of 10% and 20% (or 18% and 28% for property) and instead making everyone pay income tax rates on their gains. 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. 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. Some would prefer to see a more permanent wealth tax and others are firmly against it, but there are very few examples of wealth taxes that work well and over the last few decades many have been abandoned. The UK already has two ways in which to tax assets: capital gains tax and inheritance tax. Both of these regimes are far from perfect, but it arguably makes more sense to deal with some of the flaws in those two regimes rather than introduce a third asset tax. The UK Government has already discounted a one-off wealth tax so, although the conversations may well continue, but KPMG said in 2022 they "would not expect the introduction of a wealth tax during this Government. But never say never!". |
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