27 January 2022

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For businesses running cars and vans, what will the headline news be this year? We look at some likely big stories.

New BIK rates?

HMRC will have to give an idea of what is going to happen beyond 2024/25 and the grants for EVs are likely to be revised heavily again.

The Government last published its intended Benefit-in-Kind rates in 2019, giving businesses and company car drivers an idea of what they would pay in tax until 2025. But there has been no further indication of what might happen after this date.

However, with cars being chosen this year that may well be run beyond this date, it is likely there will be some indication this year of what will happen – not least with electric vehicles which currently enjoy very low tax bills.

The AFP says: “For some time, we’ve been calling for the Government to make benefit-in-kind taxation tables for EVs available through to the end of the decade. Currently, information has only been published up until 2024-25, leaving businesses and employees now entering into four-year cycles with no indication of what the benefit-in-kind rate will be for 2025-26.

From conversations with tax specialists, we now believe it is likely that this latter figure will be provided soon.

An announcement on road pricing?

It is edging closer to the time when the Government will have to make a decision about road tolling and pricing. The tax taken from fuel duty, in its present form worth around £30 billion a year to the Treasury, is likely to drop as electric becomes the predominant means of powering vehicles.

In its place, many experts believe, will have to come some form of road tolling. It could take many forms and there are many questions to answer. Is a flat per-mile cost fair to all? Should road tolling only be used on busy roads? Will vehicles be internally tracked or recorded through number plate recognition systems? Who pays for the toll charges if you are driving on business and how do you work out what is business or private mileage?

These questions and more may well begin to be addressed in 2022. Certainly, the AFP believes that soon “the Government will make its initial thoughts known on road tolling, which very much looks as though it is going to be the future of raising revenue from motor transport of all kinds. It could be the start of a very interesting discussion.

When the idea of ‘pay-per-mile’ road pricing was last proposed in 2005, the then-Secretary of State for Transport, Alistair Darling, eventually dropped the concept because of a lack of public support.

However, according to the Social Market Foundation think-tank, public sentiment may be shifting. It claims that people now dislike the current system of tax so much they accept that pay-per-mile taxes could be fairer.  

Its research claimed four in 10 (38%) people now support using pricing as a replacement to existing road and fuel duties. Just over a quarter, 26%, said they were opposed to the idea, while support for road pricing was broadly consistent across income groups and regions, the SMF found. 

An increase in stock?

The shortage of vehicles due to semi-conductor supply problem seems unlikely to ease until at least the middle of 2022, or beyond.

The early part of next year looks likely to see a continuation of the shortages affecting car and van supply, and according to a report on global supply from analysts LMC Automotivethe hope of a return to pre-pandemic conditions and a full recovery in early 2022 has “all but evaporated”.

It added: “The shortage of chips and other parts (including brake components, wire harnesses and connectors) are now expected to hamper both production and demand well into the second half of 2022 and possibly into early 2023. The industry is also having to grapple with logistics issues and delays at ports around the world, not to mention a shortage of drivers and other transport problems.

The Association of Fleet Professionals thinks the situation is likely to continue for the foreseeable future as well. A spokesman said: “The semi-conductor shortages that have been the main cause of on-going delays in new car and van production don’t look as though they are going away quickly, with some manufacturers now quoting the end of 2022 for delivery on mainstream models.

That means, of course, that the knock-on effects of long waiting lists will continue for a while yet, including fleets hanging on to cars and vans for longer while they await delivery, placing additional demands on service and maintenance strategies, and values in the used vehicle market remaining buoyant because of poor stock supply.

A massive increase in chargepoints?

The explosion in the number of electric cars ordered in 2021 has not been matched by a commensurate number of chargepoints being installed, the Society of Motor Manufacturers and Traders (SMMT) claims. It says 2022 will need to see a huge push to install enough to match demand.

The ratio of vehicle chargepoints to plug-in cars deteriorated by a third during 2020, SMMT research shows. At the end of 2019, 11 plug-in vehicles potentially shared a standard public chargepoint yet by the end of 2020, the ratio had fallen to 1:16.

Its research showed that between January and September 2021, 4,109 new standard public charge points were installed, compared with 125,141 EV registrations, meaning one new public charger was installed for every 30 new electric cars. There are now just over 28,000 public chargepoints in the UK, according to Zap-Map.

In order to ensure that demand does not outstrip supply, in its Net Zero Strategy plan the Government announced a Rapid Charging Fund of £950m to finance rapid and ultra-rapid chargepoints, and a commitment that all new-build homes will include an electric vehicle charging point.

However, it needs to do more, Mike Hawes, SMMT chief executive, said: “We need commensurate and binding targets for charge point rollout and reliability so that all those without a driveway or designated parking can be confident of finding a convenient charger, and one that works.

Fuel prices to increase?

Before the onset of the Omicron COVID-19 variant, it was likely that fuel prices would rise in 2022, albeit slowly.

However, should this new variant serve to stifle demand for fuel, through lockdowns or a general reduction in the amount of travel, then it is possible prices may fall and supply outstrips demand.

The fact is that fuel prices are currently volatile, and subject to any number of future global pressures – some which are known, and others which are not.

Without doubt, the price of fuel will be a major story in 2022. The question is: in what capacity? Prices might rise, but they also might fall. To stay up to date of this ongoing story, keep in touch with Allstar, and ensure your fuel management systems are in place so your business can take advantage of price reductions, and mitigate any rises too.

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