Chancellor Alistair Darling is proposing a series of measures to help revive struggling sales. Car Dealer has investigated the rumors, and here lists what the common consensus says might happen…
• VAT cut
Financial experts expect a cut in VAT, from 17.5 per cent to 15 per cent. This would make new cars cheaper and help increase cash flow.
• Delay road tax changes
Motoring groups don’t expect the new 13-band VED system to be scrapped, but they do speculate it could be delayed for a year. This would have a big effect on buying patterns.
• Scrap retrospective road tax changes
By making the new road tax bands only applicable to newer cars, the Chancellor would give the residual value hit for larger cars some much-needed relief.
• Introduce a car scrappage scheme
The AA feels the Government should introduce a stimulus scheme. This would give a cash incentive to drivers scrapping their old cars for a brand-new ‘green’ model.
• Reduce income tax
Some speculate the Chancellor may trim 1 per cent off the basic rate of income tax for this financial year. A temporary measure, it would boost customers’ buying power.
• Aid for small businesses
Loss relief for small businesses will be looked at. Experts feel the Government won’t go so far as to announce a tax ‘holiday’, but will assist struggling firms.
• Cancel small company corporation tax hike
Next year, corporation tax for small businesses is going up from 21 per cent to 22 per cent. Not if, say the number-crunchers, the pre-budget report has its way.
• Cut corporation tax for large businesses
28 per cent is what the country’s larger dealer groups pay. They really are struggling – it is expected this rate will be cut, too.
• Increase bank liquidity
Banks aren’t lending to each other, so customers are finding it harder to get loans. The Chancellor is expected to relax lending rules, to get things moving again.
• Tax relief for empty properties
Dealers with empty premises now find they have to pay tax on their holding – even though it is not trading. Unfair, and expected to be dealt with in the pre budget report.
• Scrap a rise in fuel duty
This has been delayed in many budgets. Some experts reckon, even though fuel prices have fallen, the Chancellor will finally scrap it.