Budget - key areas operators need to know

We’ve pulled together the key budget announcements for our industry, and what these could mean for you and your business.

Fuel duty

The freeze on fuel duty is very welcome news and we’re pleased the Chancellor has heard us loud and clear.

The freeze had been due to end in April 2025 and will now be kept for another year. There will, however, be an inflationary increase in Vehicle Excise Duty and the HGV Levy from April next year.

Thank you to the 900 RHA member companies contacted their local MP over the past month using our template website tool. We are grateful to members for supporting our campaign.

RHA was also featured extensively in national media - on BBC News welcoming the fuel duty freeze, on ITV news the day before the Budget calling for the freeze to continue and in the Telegraph. We were also featured in the Sun earlier this month. We partnered with the independent economists at the Centre for Economic and Business Research to demonstrate that an increase to fuel duty would be highly damaging to the UK economy, cutting GDP by £430m after 5 years and raising consumer prices by 0.2%.

Inheritance tax

The government have proposed changes to how inheritance tax is collected by businesses. The existing 100% rate of relief will continue to be available for the first £1 million of property qualifying for business property relief. The rate of relief will then fall to 50% for the value of any qualifying assets over £1 million.

Treasury statistics indicate that this will affect a minority of businesses. From 2021-2022 only 13% of businesses that applied for business property relief did so over the new £1 million threshold.

The changes proposed to business property relief are highly concerning. Whilst much of the discourse around inheritance tax changes have focused on agricultural property relief, those passing down businesses that qualify for business property relief will also be affected. Many young people who enter the industry do so by inheriting assets that have transferred over many generations.

These changes therefore are something that we will oppose directly with the Treasury.

Employer National Insurance

Operators are clear the proposed rise in Employers’ National Insurance to 15% from 6 April 2025 will make hiring staff and creating jobs harder. Increasing the minimum wage above inflation will also impact all costs within the supply chain with businesses will have to accommodate this increase against a challenging economic backdrop.

At the same time, the employee threshold at which the employer National Insurance rate kicks in will be lowered to when an employee earns £5,000 rather than the current £9,100, adding to employment costs for many SMEs.

At a time when insolvencies in our sector are at a record level, we need policymakers to work with us to minimise the financial burden placed on these businesses, not add to them. More than 95% of the haulage industry are small and medium sized companies, operating at an average profit margin of 2%.

We welcome the Chancellor’s commitment to increase the employment allowance for small businesses from £5,000 to £10,500. This will shield smaller employers from the effects of significant increases in employment costs, and will, for example, mean a small firm can employ four people on National Living Wage without paying any employer National Insurance Contributions (NICs). The Government has also removed the employer NICs cap of £100,000 to access the Employment Allowance, which means employers of all sizes will now benefit from the £10,500 relief.

On road investment

The continuation of work on major strategic roads – the A47, A57 and A75 – is welcome, but we are concerned about delays and cancellations to other significant road projects such as the Lower Thames Crossing and the A303 Stonehenge tunnel. Economic growth will only be achieved with investment in the infrastructure to support it. Whilst we await the announcement of RIS3, we urge the Government to ensure that it backs new projects that eliminate congestion, connect the country, and unlock economic growth.

On local roads maintenance

We welcome the additional £500m in the local road maintenance budget allocated for potholes. Investment in new and improved roads will reduce congestion and increase productivity.

However it is vital that local authorities receive long term road maintenance funding to enable better planning and scheduling of essential road and pothole repairs. When local authorities are properly financed, they are not only able to undertake more repairs, but longer-term more resilient road maintenance. This offers far better value to the taxpayer, and results in more effective repairs. According to the Asphalt Industry Alliance, the rate of pothole repairs in England and Wales has reached an eight-year high, with a staggering £16.3 billion needed to fix the country’s roads: additional funding will need to be provided to ensure this cost does not spiral further.

Business Rates reform

The proposed changes to Business Rates to introduce a higher multiplier for the most valuable properties could unfairly penalise logistics businesses who operate large warehouses. Logistics premises including warehouses require a larger footprint but offer a relatively low return on land values. Logistics businesses need a rates system that supports growth and incentivises success by not punishing those that are seeking to move to larger premises or operate in in high-cost areas.

Alongside the Budget, the Government have since launched a Transforming Business Rates policy paper. The RHA have lodged our concerns regarding these changes and will be included in the government’s period of engagement to represent the industry’s voice. The period of engagement will take place between November of this year and March of next year.

Net zero

Whilst the £200m investment in the Zero Emission and HGV Infrastructure Demonstrator (ZEHID) initiative continues together with some welcome headline announcements to support nascent green technologies such as £2.3bn in revenue support for 11 green hydrogen projects, overall, long-term support to help hauliers and coach operators invest in diesel vehicles was thin-on-the-ground from this year’s Budget.

With the transition estimated to cost £100bn for the haulage industry alone, we continue to call for a fuel duty rebate linked to emissions reduction to incentivise a switch to low carbon alternatives fuels. Additional support is also necessary to invest in the energy infrastructure needed to power zero emission vehicles and to stabilise the residual values of both the zero emission and legacy diesel fleets. This will then allow fleets to plan their vehicle replacement programmes with confidence.

On Full Expensing

Full expensing has been a transformative tax reform, and the announcement from the last Government looking to extend it to leased assets was welcomed by the HGV and coach operators who do not own their vehicles. We are therefore concerned there is no mention of this proposal in the budget documents and will be seeking clarity from the Treasury as to its intentions with this proposed reform. For HGV and coach businesses that do not have the access to the significant capital or finance to own their vehicles, this proposed relief could be transformational for their chances to survive these difficult economic times.