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Ahead of Monday's (29 October) budget, Andrew Galliers, senior tax manager and transport and logistics sector specialist at accountancy firm Menzies, sets out his thoughts on assisting operators with the transition to a sustainable future.
To alleviate pressures on fleet operators, hauliers, freight forwarders and other businesses in the transport and logistics sector, the chancellor must introduce transitional relief to aid them during the introduction of clean air zones (CAZs).
It is now only a matter of months until the start date for the Ultra-Low Emission Zone (ULEZ) in London, and further CAZs are expected to roll out across the country in 2020; arriving in Birmingham, Derby, Leeds, Nottingham and Southampton.
The restrictions in these areas will apply to all vehicles but with varying effect. Some of the zones will be non-charging, while others will be charged, meaning that drivers who enter the zone in vehicles that don’t meet the specified environmental standards will be forced to pay a fee.
However, the uncertainty surrounding the nature of the restrictions in each zone is making it difficult for fleet operators and other transport businesses to plan ahead. Many are hoping for some level of transitional relief.
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ULEZ and the CAZ are perfectly sound propositions in theory. However, with the zones being devised and implemented by local authorities, this has led to a lack of cohesion with regards to the precise nature of the restrictions and charges to be imposed.
The chancellor must acknowledge the significant financial and administrative strain this will cause businesses in the sector and announce a transitional relief scheme to provide financial support.
Tightening emissions and fuel standards have had the knock-on effect of making the market for second-hand vehicles decline dramatically. It is important that the chancellor considers the investment that many businesses have made in their fleets and their expected commercial lifespan.
Some businesses are leasing vehicles, under agreements which may not end for years and may not be able to justify investment in new motors. Transitional relief could provide much-needed support for businesses as they switch to greener vehicles.
The chancellor could also provide incentives, such as additional tax credits, to encourage use of greener vehicles. However, this may be wishful thinking, considering the government has just lowered the plug-in car grant for owners of electric cars.
Businesses in the sector understand the importance of protecting air quality and reducing CO2 emissions and are willing to make the transition to greener vehicles. However, rising costs, increasing administration and low operating margins mean that they urgently need support.
