The car rental industry could be hit with a tax rise of more than £30 million if the government goes ahead with its plans to change the Vehicle Excise Duty regime in April.
What is changing?
What is the impact?
- In 2016, UK rental companies purchased around 324,000 new cars, with 1 in every 3 being either wholly manufactured or containing a major element built in the UK.
- The proposed changes will lead to the average duty paid for a new car to rise to £170 per car, up from £36 under the old system, amounting to over £55 million in total, compared to £11 million in 2016
- As a result of these changes, rental companies are likely to change their purchasing decisions, with an estimated 24,800 fewer cars being purchased
- In 2016, the purchase of 24,800 cars supported a value added contribution of £84 million to UK GDP, also supporting 1,270 jobs and £23 million in tax receipts to the Exchequer
- Vehicles purchased by the rental sector are typically more efficient than the average new car on UK roads (116.3g CO2 per kilometre, compared to 121.4g CO2/km), so the proposed changes are likely to impact upon emissions targets.
How can BVRLA members help?
- Writing to your local MP to tell them about your concerns and asking him/her to raise the issue with Jane Ellison, Financial Secretary to the Treasury. You can download a template for such a letter, and find your MP’s contact details here.
- Making your customers aware of the impact of these changess and encouraging them to get in touch with their MP.