Logo: Alphabet

Previous Next

2023 Spring Budget Summary

During his pre Budget media interviews the Chancellor of the Exchequer, Jeremy Hunt, trailed a ‘back to work budget’ promising a raft of measures designed to encourage millions of adults back in to the job market in order to stimulate economic growth, which is one of the Prime Minister’s five priorities for the remainder of this Parliament.

Aiming to build Europe’s most dynamic economy, the Chancellor promised to tackle the UK’s longstanding productivity issues, highlighted by lower business investment and higher economic inactivity than similar countries, by setting out an industrial strategy built upon the four pillars of:

  • Enterprise
  • Employment
  • Education
  • Everywhere

Concluding his speech by highlighting the actions taken to remove the two biggest barriers to business growth, investment incentives and labour supply, the Chancellor trumpeted the delivery of the best investment incentives in Europe and the UK’s biggest ever employment package, but other than increased pothole funding what should fleets take note of in this Budget?

Fuel duty

In a move generally welcomed by leading industry bodies, such as the RAC and Logistics UK, the temporary 5ppl fuel duty cut introduced last year has been extended and fuel duty frozen again for another 12 months.

Corporation tax relief

Whilst confirming that the rate of corporation tax to be paid by the most profitable companies will increase to 25% from April 2023, with the super deduction expiring on 31 March 2023 to encourage investment, and thereby stimulate the economy, the Chancellor introduced a new first year allowance for qualifying plant and machinery bought by companies between April 2023 and March 2026.

Delivering tax relief of £9 billion per year, the new first year allowance, referred to as ‘full expensing’, will apply to vans and lorries, but cars will be excluded.

As they would ordinarily qualify as main rate expenditure vans and lorries will qualify for a 100% first year allowance, albeit a 100% balancing charge must be recognised on disposal, effectively adding the sales proceeds to taxable profits.

Special rate assets will be eligible for a 50% first year allowance, with a corresponding balancing charge recognised on disposal, with the remaining expenditure qualifying for a 6% annual writing down allowance in the normal way.

Assets bought to lease will also be excluded, but in announcing the new allowances, the government has indicated that it will work with the BVRLA to develop a policy solution that includes this key vehicle acquisition method for the first time.

Commenting on the announcement, BVRLA Chief Executive, Gerry Keaney, said:

“The government has acknowledged how critical vehicle rental and leasing is in driving business investment in cleaner commercial vehicles and infrastructure. We look forward to working with them in the coming months to develop a powerful capital allowances regime that can drive even faster decarbonisation of road transport.”

Support for electric vehicles

Although the extension of the 100% first year allowance for workplace charge points was confirmed in the 2022 Autumn Statement, leading fleet industry figures have bemoaned the lack of any additional support to strengthen the national charging network especially as the upcoming Zero Emissions Vehicle mandate incentivises manufacturers to bring more electric vehicles to the UK, which will put even greater strain on the charging network.

And the well-known motoring journalist and founder of FairCharge, Quentin Wilson, decried the failure to reduce the rate of VAT charged on public charging to that charged on home charging.


Purely from a fleet perspective the 2023 Spring Budget offered only a few directly relevant measures, but let’s not forget that the imminent new tax year will still herald a raft of tax changes announced in the Autumn Statement, including inflation linked increases to van and fuel benefits, as well as Vehicle Excise Duty.

It will also see the headline rate of corporation tax increased for the first time this century and the advent of the so called ‘stealth tax’, with the personal allowance and other key income tax thresholds being frozen or reduced.

The continued freezing of fuel duty has been widely welcomed, as has the new first year allowance for qualifying plant and machinery, but expect the rationale to be questioned as the detail is understood and unincorporated businesses realise they will not be eligible to claim the enhanced relief, which is only available for companies in the charge to corporation tax.

As far as companies procuring vans and lorries are concerned, the new first year allowance may impact the longstanding lease or buy conundrum, given all end user purchased petrol or diesel vans will now qualify for a 100% first year allowance, but leasing companies will not be able to claim this on the commercial vehicles they buy to lease.

And, finally, whilst not reflected in the industry reaction to the lack of new incentives for electric vehicles, how will the environmental ambitions of the government be furthered by an incentive to buy commercial vehicles powered by an internal combustion engine?