NIC and living wage will add cost pressures on dealers

With many motor dealers already experiencing the challenge of increased overheads and squeezed margins, the extent of the changes to Employers NIC and living wage will provide additional unexpected cost pressures for auto retailers.

That being said, it was pleasing to see the inclusion of measures to support the uptake and manufacture of electric vehicles in the UK, although some may view this Budget as somewhat of a missed opportunity to take substantive steps to encouraging wider EV ownership.

A point that many will have overlooked is the announcement that the government intends to end what they class as “contrived” car ownership schemes.

Whilst it is currently unclear which types of schemes may be targeted, as many dealers run their own Employee Car Ownership Schemes or are involved in third party schemes either as customer or provider of vehicles, this could be another change that could cause cost and practical difficulties in the sector.

Finally, an impactful measure hidden in the detail of the Budget documents is that from next April double cab pickups with a payload of one tonne or more will be classed as cars for benefit in kind and capital allowance purposes, greatly increasing the tax cost of these vehicles.

Dealers will remember the issues caused when a change in treatment was last proposed, including customers cancelling orders so this is again a tax measure that will present the industry with business challenges.

Michelle Malone is a director at Xeinadin