Driving Growth: What the automotive sector needs from the upcoming Budget

Like much of the country, the automotive industry is tentatively awaiting the UK government's Budget announcement on 30 October, as it wrestles with the country's significant financial challenges. The Chancellor faces a tough balancing act: making unpopular choices to close the so-called 'black hole' in public finances while trying to drive growth in the UK economy. Rachel Reeves must tackle the complexities of raising funds through fair taxation, optimising public assets, and avoiding measures that could deter growth or alienate key industries. Her task is made even harder by demands to address wealth inequality, enhance public services, and maintain stability.

Within this context, the automotive sector is making sure that its voice is heard, emphasising the profound impact that government decisions can have on the industry's contribution to the economic prosperity of individuals and the country as a whole. The sector is calling on the government for specific support measures, including initiatives to accelerate zero-emission vehicle (ZEV) uptake, preserve current tax incentives, and safeguard affordability for key segments of the industry.

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Supporting?ZEV uptake

The Society of Motor Manufacturers and Traders (SMMT) has outlined a five-point plea to support the uptake of zero-emission vehicles. It is calling for an extension of VAT exemptions for electric vehicles, which would reduce the upfront cost for consumers and make EVs more affordable. SMMT is also urging the government to provide additional financial support for consumers looking to switch to electric vehicles, as this would help overcome the cost barrier that many face when considering a move away from internal combustion engines.

In addition, SMMT is advocating for a revision of vehicle taxation to favour greener options, thereby encouraging the transition to zero-emission vehicles. This would create a financial incentive for consumers and businesses to choose electric over conventional vehicles. Investment in charging infrastructure is another key demand, as improving access to charging points is crucial to making electric vehicle ownership practical and convenient for everyone. Finally, SMMT is calling for support to help businesses transition to electric fleets, including targeted incentives for commercial vehicles, which would facilitate the adoption of electric vans and trucks.

These measures are pivotal for accelerating the transition to electric mobility, ensuring that consumers and businesses alike are not held back by prohibitive costs or logistical challenges.

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Fleet?industry?concerns on Salary Sacrifice

The fleet sector is closely watching how the Chancellor will approach tax reforms. Specifically, industry players are anxious about reports that the government is considering removing tax breaks for electric vehicles provided via salary sacrifice schemes. Fleet bodies,?as well as many employers, view these schemes as instrumental in promoting EV adoption, making EVs financially accessible to more employees by spreading out costs.

Cutting the tax break would likely reduce the incentive for companies to promote electric vehicles to their employees, which could slow the rate of uptake. The fleet sector’s concern is not just about the impact on companies, but also the wider influence on the UK’s path to reducing emissions. The government is being urged to recognise the value of these initiatives in making electric vehicles available to a wider segment of the workforce.

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Road Haulage Association's?call for?fuel?duty?stability

?The Road Haulage Association (RHA) is calling on the government to retain the current freeze on fuel duty. Hauliers already face growing costs, with economic pressures squeezing margins across the board. The RHA argues that an increase in fuel duty would disproportionately affect the logistics sector, further inflating costs that will ultimately be passed on to consumers.

For an industry grappling with the ongoing challenge of decarbonisation while ensuring continuity of goods movement, the RHA emphasises that a stable fuel duty policy is critical. It wants to see support from the government in navigating these challenges—not additional burdens in the form of higher taxation.

With the Budget just around the corner, the automotive sector is clear about its needs: incentives to make electric vehicles more accessible, retention of tax breaks that make EVs viable for a broader workforce, and stability in the cost structures affecting logistics. While the Chancellor’s job is far from easy, the automotive industry is hopeful that these targeted actions will ensure the sector can continue its vital role in driving forward the economy and supporting the UK’s climate goals.

The Budget outcome will set the tone for the automotive landscape in the coming years—and the industry is keen to see signals of support as it navigates a changing world.

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