PHEV’s affected as well as DCPUs but Used Car Market will Benefit
Contrasting comments have been voiced across the automotive industry following last week’s budget. Initial reaction focused on the treatment of Double Cab Pick-Up Vehicles such as the Ford Ranger and Toyota Hilux.
Following a Court of Appeal judgement, the Government will treat Double Cab Pick-Up Vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes. From 1 April 2025 for Corporation Tax, and 6 April 2025 for Income Tax, DCPUs will be treated as cars for the purposes of capital allowances, BIK, and some deductions from business profits. The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025.
The decision means that company car drivers will cease to order DCPUs in the future. But it is not just DCPUs that were affected by the budget. Plug In Hybrid Vehicles (PHEVs) have also been in the spotlight as the dust has settled following last Wednesday’s announcements.
Company car drivers paying a 5% benefit in kind on a new PHEV in the current tax year will see a jump to 18% by year four of ownership in 2028/29. There has been good growth in PHEV purchases during the last year or so due to increased electric range. Drivers have seen these cars as a useful stepping stone to going fully electric, overcoming concerns about range anxiety and the charging infrastructure; as a result, they have made their way onto an increasing number of fleet choice lists.
The new wave of PHEVs will remain likely to find sales is in the private sector. Individual consumers are showing quite a high level of resistance to EVs for a variety of reasons and PHEVs provide a solution; but they will need to pay the newly increased first year vehicle excise duty.
Used Car Market
The budget has not been all bad news. Used car dealers have broadly welcomed a range of the measures as being good for the used car market.
November’s Startline Used Car Tracker https://startlinemotorfinance.com/ shows a net positive response for key moves such as the freeze in fuel duty (+54%), higher living wage (+23%) and increased investment in public services (+23%).
They are also upbeat about the effect of Labour’s £70bn investment in the economy (+59%), the creation of the new Skills England training initiative (+52%) and freeing up of personal tax thresholds (+26%).
The least popular policies were higher Employer National Insurance (+7%) and the increase in Capital Gains Tax (-7%).
The research shows that 63% of motorists say they are more likely to buy a car in the next 12 months following the Budget. 29% say their finances have been unaffected by the Budget and 12% that they’ve been improved while 10% say that they had been waiting for the Budget before making a purchasing decision.
Author: Ian Hare, Managing Director, Motor Managment
