So, never has a Budget been so highly anticipated as Labour’s first for 14 years, with PM Sir Kier Starmer MP stating in August that “the Autumn Budget is going to be painful”. He put UK businesses on notice that operating costs may rise significantly. Labour pledged in their manifesto not to increase income tax, National Insurance or VAT. However, Chancellor Rachel Reeves MP repeatedly argued that the promise only applied to taxes on “working people”, not employers. Little comfort then for UK transport operators.
Prior to the Budget, increases in fuel excise duty of between 5ppl and 10ppl were rumoured. So, when Reeves announced no immediate changes to fuel duty, this came as a massive relief to all road users, and in particular, heavy truck operators. So, all good then? Not quite!
Road tax for lorries
Road fund licence fees increased, but seemed to go largely unnoticed on Budget day. So, what changed?
Pre-Budget
Articulated trucks (3 + 3 axles)
HGV Levy £576
Road fund £560
Total £1,136
From April 2025
HGV Levy £597
Road fund £580
Total £1177 (an increase of 3.6%)
While this doesn’t seem too terrible, this is actually a 110% increase on pre-August 2023 rates when the levy was not being charged.
Employer’s National Insurance
Up from 13.8% to 15%.
Chargeable from £5,000 annual salary, down from £9,100.
Let’s see what this means to an average operator employing 10 drivers, paying an annual salary of £39,000.
Pre-Budget employers’ NI per year would be £41,262, and after the Budget it increases to £51,000. This represents an increase of 23.6%.
Minimum wage
For workers over 21 this went from £11.44 to £12.20 an hour, an increase of 6.7%.
While we have come to expect the minimum wage to increase year on year regardless of who is in government, we still must consider the cost impact on the operator.
Again, let’s see what impact this has on the operator employing ten staff currently on £11.44 per hour, increasing to £12.20 per hour next year. This would result in a salary increase of £2,590 per person per year, or £25,909 for all 10 staff. But don’t forget, there’s also the increase in employers’ NI to go on top of this, another £1,004 per year per employee.
Having listened to the Budget, many operators were rightfully breathing a sigh of relief that fuel duty had not risen. However, when company accountants factor in the increases in wages and road fund licences amongst others, there are going to be some very tough decisions to be made by operators. Prices to customers will have to rise (much easier said than done) or further cuts made to the operation. I foresee another winter of discontent ahead.
Jamie Cartwright, consultant, Dynamic Transport Consultatnts
