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Budget: The reaction

Time 8:47 am, March 25, 2010

budget-2010-called-for-24-marchWHAT does the budget mean to car dealers? Here industry experts explain all in our round-up.

Chancellor Alistair Darling delivered the Budget yesterday with a hold on fuel increases and more funding for road improvements, but what does it all mean?

Here, Car Dealer is publishing the opinion from the industry as and when we receive it.


SMMT chief executive, Paul Everitt

‘Measures to encourage more and better priced lending to consumers and businesses, alongside additional support for investment in low carbon vehicle technologies is further evidence of the new priority given to UK motor manufacturing.

There is disappointment that the introduction of the first year VED rates have not been deferred, but the doubling of the annual investment allowance will give a lift to the commercial vehicle market.’

Accountants ASE Global


‘Chancellor Alistair Darling has played safe. There was however one good piece of news for motor dealers who will be undertaking capital expenditure in the coming months. With effect from April 1 all eligible businesses will be able to claim a 100 per cent deduction for the first £100,000 of expenditure on plant and machinery. This is referred to as the Annual Investment Allowance, with the current level being just £50,000.

Another benefit for a limited number of dealers who are looking to sell their business, is that Entrepreneurs Relief, which allows the first £1m of gain to be taxed at 10 per cent will rise to £2m with effect from April 6. Any gains in excess of this amount will be taxed at the current capital gains tax rate of 18 per cent thus giving an £80,000 tax saving for dealers lucky enough to make a gain of £2m!’

Dr Tom Kirchmaier, car industry expert at Manchester Business School

‘As always when state budgets are tight, motorists can expect to suffer over-proportionally. However, what looks like a substantial tax hike with a staggered 3p increase in fuel prices over the next year is in essence not all bad news. Given that the efficiency of the engines has increased.

While of course higher taxes are always painful, the Treasury leaves us to enjoy some of the savings of higher fuel efficiency. It could have come much worse.’

Professor Stephen Glaister, director of the RAC Foundation

‘At last there is some relief for cash-strapped motorists who over the past year have seen the pump price of unleaded leap by 26.4p to almost record levels. With nine out of 10 passenger journeys taking place on the roads, and with 28.5m cars in Britain, every household in the land has felt some financial pain.

If the full planned increase had gone ahead on April 1, it would have added more than 3p to a litre of petrol. That’s an extra £2.50 every time you fill up an average family car like a Ford Mondeo.’

The RMI

‘Today’s Budget announcement provided a few positives for the retail motor industry but in the main did not address the key issues affecting the industry.

The Annual Investment Allowances is a welcome incentive for businesses to invest in capital equipment and infrastructure. The announcement to halve business rates for one year from October 2010 will help many businesses too.

And the announcement to extend businesses ability to stage VAT and other tax payments will be very welcome.


But we are disappointed that certain key issues affecting the motor industry were not addressed. These being National Insurance, Small Business Corporation tax and the First Registration Tax for new cars.’

BVRLA chief executive John Lewis

‘This was more of a pre-election statement than a Budget and there was precious little for road users to get encouraged about.

By doing nothing to reduce grey-fleet encouraging AMAPs rates or the 3 per cent diesel surcharge, the government has yet again failed to remedy the inequalities in its emissions-reduction strategy.’

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Association of Car Fleet Operators

‘A pretty insignificant budget for most fleet operators – at least so far as the fleet operation is concerned. While this was pretty widely predicted it is still something of a relief.’

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James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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