In the last days before the Budget there had been speculation regarding a specific hit on diesel users with some people suggesting a possible increase in fuel duty on diesel of as much as 2-3ppl which was quite alarming to both the haulage industry and millions of ordinary punters, since pump prices had already gone over the 120ppl mark at many sites across the country.
Given all the speculation beforehand, the Budget statement itself was rather brief, and in terms of ’big announcements’ something of a damp squib.
Fortunately there was no increase to duty on diesel at all. In fact the increase in fuel duty that had been scheduled for next April was scrapped. However, drivers of diesels didn’t escape entirely: company car drivers face a rise in the existing Company Car Tax diesel supplement from 3% to 4%, with effect from April 6, 2018 applying only to diesel cars which do not meet the Real Driving Emissions Step 2 (RDE2) standards. Similarly, there was an increase in Vehicle Excise Duty that will apply to new diesel cars first registered from April 1, 2018. This will not apply to ’next-generation’ clean diesels those which are certified as meeting emissions limits in RDE2. Taken together, if you’re thinking of replacing a company car, you should check whether your intended new oil-burner qualifies as ’clean’ or seriously consider going back to petrol. Of course, you could always think of LPG: the Chancellor announced the end of the fuel duty escalator for LPG, meaning that the LPG rate will be frozen in 2018-19, alongside the main rate of fuel duty. As far as all company car drivers are concerned, the Fuel Benefit Charge and the Van Benefit Charge will both increase by RPI (2.8%) from April 6, 2018.
Tobacco and Alcohol:
Although overall duty rates on beer, cider, wines and spirits were left unchanged, the Chancellor announced the introduction of a new duty band for still cider and perry from 6.9% to 7.5% abvs. The intention is to implement this in 2019, but of course that rather depends on the government’s ability to actually pass any legislation through parliament given that it’s a minority administration.
Tobacco didn’t get off so lightly. Duty rates on all tobacco products will continue to increase by 2% above RPI inflation (therefore approximately 4.8% at the present time) until the end of this Parliament. Hand-rolling tobacco will increase by an additional 1%. These changes came into effect from 6pm on 22 November 2017.
National Living Wage:
The National Living Wage (for employees aged 25 and over) will increase by 4.4% from April 1, 2018 from £7.50/hour to £7.83/hour. Other National Minimum Wage increases are: 21-24 year olds from £7.05 to £7.38 (+4.68%); 18-20 year olds from £5.60 to £5.90 (+5.36%); and 16-17 year olds from £4.05 to £4.20 per hour (+3.70%).
Personal Tax Allowances:
For 2018-19, the Personal Tax Allowance will increase from £11,500 to £11,850 and the higher rate threshold will rise from £45,000 to £46,350; both increases will come into effect on April 6, 2018.
Class 4 National Insurance Contributions (NICs):
Of particular relevance to those many smaller retailers who still trade as self-employed sole traders (ie not working as directors of their own operating companies) are Class 4 National Insurance Contributions. While all self-employed traders are required to pay Class 2 NICs as a matter of course, once profits exceed £7,755 they also become liable for additional Class 4 NICs. The government has confirmed that they will no longer proceed with an intended increase to the main rate of Class 4 NICs from 9% to 10% in April 2018, and to 11% in April 2019. So perhaps a little good news to end with for some of our readers!
There it was, another Budget gone in a flash. As always there’s a lot of detail which the Treasury publishes after the event, and which rarely makes the headlines at the time one reason being that much of it refers to ’discussion documents’ relating to longer-term changes that they’d like to make, but which are maybe too complicated to implement immediately without the agreement of many stakeholders.
Another reason is that many of the things that they’d like to do in the long term are very ’political’ and they’d need a considerable working majority to get them through Parliament. Still, we can no doubt look forward to more of the same in the next ’Spring Economic Statement’ or what used to be the ’Spring Budget’.