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26th April 2007, Page 57
26th April 2007
Page 57
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What the Budget said Euro-5 incentives

As revealed in the 2006 Pre-Budget Report, the government has considered incentives for the early uptake of trucks and buses that meet the Euro-5 emission standard. It is renewing a reduced pollution certificate (RPC) scheme for trucks and buses that meet the Euro-5 standard before it becomes mandatory in November 2009.The scheme comes into force in October 2007,and will be similar to the one that existed before October 2006 for Euro-4 vehicles. Details of the incentive have yet to be released, but it is expected to be in the region of £500.

The Euro-4 emissions standard for small vans became mandatory from 1 January and newly registered vans are no longer eligible for the reduced rate of vehicle excise duty (VED). However, the discount will remain for the lifetime of vans meeting the Euro-4 requirements which were. registered before the beginning of the year. The EU has recently reached agreement in principle on Euro-5 and 6 emission standards for cars and small vans, with the regulation likely to comt into force towards the end of the year.

Protecting the haulage industry

The 2006 Pre-Budget Report stated that the government would undertake a feasibility study into options for delivering a database of foreign vehicles, including the possibility of a vignette.

The Department for Transport (MT) plan: to consult the haulage industry enforcement agencies and ferry operators through a stakeholder working group, and a feasibility study is expected to report conclusions in time for the 2008 Pre-Budget Report.

The government has also said it is important to protect the competitiveness of legitimate hauliers by maximising the likelihood that non-compliant vehicles are identified and stopped. It is planning to tripli the amount currently spent on the South East International Traffic pilot.This is to improve the targeted enforcement achieved by the combined use of intelligence and technology to target those that compete unfairly and threaten the safety of other road users.At least 50,000 such targeted checks of vehicles on international journeys are planned for 2007-08.

Green taxes

This Budget responds to the Stern Review Report on the Economics of Climate Change and sets out the next stage in the government's strategy for tackling climate change,including: • an increase in fuel duty rates of 2p/lit from 1 October, and increases in the next two years of 2p/lit and 1.84p/lit respectively; • a package of measures to support biofuels including extending the 20p/lit biofuels duty differential to 2009-10; • a review to examine vehicle and fuel technologies which could help 'decarbonise' road transport over the next 25 years.

The Chancellor has asked Professor Julia King,vice-chancellor of Aston University and former director of advanced engineering at Rolls-Royce, working with Nicholas Stem, to lead the technology review. It will draw upon expertise in industry, in the UK and internationally, and across government — in the DtT, Defra, the DTI and the Treasury. It will feed into the work of the Energy Technologies Institute.The Transport Secretary will set out the terms of reference for the review.

VED rates for LGVs, special types vehicles, combined transport vehicles and all vehicle categories that are linked to the basic goods rate have been frozen.

Tax cuts, tax rises

Globalisation and technological change are driving rapid shifts in the competitive environment and creating new opportunities and challenges. Raising productivity in the UK is critical for sustained economic growth and continued prosperity.

The 2007 Budget sets out government plans to strengthen UK productivity through a reduction in the rate of headline corporate tax from 30p to 28p from April 2008 and an increase in the small companies' rate from 20p to 22p by 2009.

The rates and qualifying rules for capital allowances have remained almost unchanged for more than 20 years. The government is to reduce the rate of capital allowances on the general pool of plant and machinery from 25% to 20 %, effective from April 2008, bringing it closer into line with economic depreciation.

Fixtures that are integral to a building will be separately classified and included in the 10% capital allowances pool, effective fromApril 2008.

There will be an increase in the rate of capital allowances on the pool of long-life assets, which applies to assets with expected lives of more than 25 years, from 6% to 10% from April 2008.

The government will also introduce an Annual InvestmentAllowance (AIA) available to all businesses regardless of size, which will mean that 100% of expenditure up to £50,000 on general plant and machinery (other than cars) can be offset against taxable profits. The MA will be effective fromApril 2008 and will target support on all businesses that are investing for growth.

Fanny Loucas, a director at PricewaterhouseCoopers' tax practice, says the fuel duty rises will not be a surprise to anyone, but are clearly not good news for UK hauliers when faced with competition from foreign operators buying cheaper diesel on the Continent.

"In the global context, the reduction in corporation tax does not make the UK that competitive.but a road haulier is not going to relocate to anywhere far-flung — so it's good news," he says.

The bad news

Loucas says the news for smaller hauliers is not so positive, with an increase in the small company rate.The taxation band is based on the size of a company's profits, not its actual size, so this change will affect hauliers with lower profit levels, "The only other thing that might impact hauliers is the capital allowance change.At present in the UK you receive a write-down allowance for capital expenditure on assets that will depreciate."

This means a company with a large depot full of shelving can claim a tax deduction for part of the life of that shelving. "That rate used to be 25%, but it will now go down to 20%, and in some cases 10%, and this will mean that some companies will have to pay more in their tax return each year."

This will affect logistics firms and operators with large storage facilities. •


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