Budget 2021: what it means for UK automotive

C

hancellor of the Exchequer Rishi Sunak has revealed the details of the 2021 Budget, outlining the government’s recovery and spending plans for the next 12 months.

The key points from the 2021 Budget affecting the automotive industry:

• The furlough scheme will be extended until the end of September. After July, businesses will be asked for a 10% contribution, rising to 20% in August and September.
• Business rates holiday will be extended through to the end of June, while 5% reduced rate of VAT will be extended for six months to 30 September, followed by an interim rate of 12.5% for another six months.
• Introduction of a Recovery Loan Scheme. Businesses of any size can apply for loans from £25,000 up to £10m, through to the end of 2021.
• Restart Grants will see non-essential retail businesses receive grants of up to £6,000 per premises.
• Corporation tax will rise to 25% in 2023, for businesses with profits of over £250,000.
• Planned increase in fuel duty has been cancelled.
• Apprentice incentive payments will be doubled to £3,000.

Industry response to the Budget reflected cautious positivity, as the extension of both the furlough scheme and the business rates holiday gives companies that extra breathing space when recovery begins.

One glaring omission from the Budget, however, was any form of supporting the transition to zero-emission vehicles. “In this crucial year, with COP 26 in the autumn and the sector facing a mammoth task in decarbonizing within just nine years, we had hopes to see more measures to support the transition,” said Mike Hawes, chief executive of the SMMT.

“This is an opportunity lost, so we look ahead to this year’s Comprehensive Spending Review for the commitment to the infrastructure, incentives and wider competitiveness measures that will enable the UK automotive industry to be the global leaders in the shift the net-zero mobility.”