default_image
© Khunaspix Dreamstime.

For the most part there were audible sighs of relief from much of the UK’s freight and logistics industry in the wake of the latest budget from the country’s coalition government.

The key domestic issue for much of the UK’s freight service providers was inevitably fuel duty – as it has been for at least the last decade, if not longer – and the news that a planned £0.03 per litre fuel duty increase in September has been cancelled was widely welcomed, although PwC automotive partner Phil Harrold cautioned that as its effect will be partially mitigated by the continuing weakness of sterling against the dollar.

“Whilst the freezing of fuel duty is welcome, the offsetting risk is the exchange rate with the US dollar. As the British pound falls then prices, which are dollar driven, are forced higher as witnessed over the last two months.”

However, one of the main arguments against the fuel duty increase used by UK truckers was the way it distorted competition with non-UK hauliers who have access to cheaper fuel on the continent. With the Euro under similar pressure as Sterling, the playing field could be further levelled, said Mr Harrold, “UK hauliers can also be assisted by the freeze as they are competing with their European counterparts, who in turn are suffering from the inflated dollar. By holding back on fuel duty this will help create a more level playing field with Europe.”

The British International Freight Association director general Peter Quantrill added that he hoped the September cancellation was “a sign that the government will now eliminate fuel duty rises for the rest of this parliament”.

“That would go some way to delivering the sort of long term certainty that our association’s members want, but it does not mean that we will  stop asking for an outright cut, the introduction of an essential-user rebate and some form of fuel duty stabilisation mechanism,” Mr Quantrill added.

He also welcomed the announcement of a £3bn per year allocation from 2015-2020 on infrastructure developments – although Chancellor George Osborne gave no indication as to which particular projects would receive funding.

This was in marked contrast to aviation industry lobbyists, who claimed Mr Osborne’s decision to press ahead with a planned increase in air passenger duty in April would hit the sector hard.

Dale Keller, chief executive of the Board of Airline Representatives in the UK, said: “Just because the industry was fully expecting a slap in the face from the Treasury does not make it any more palatable. It’s beyond belief that the Chancellor has put beer before aviation.

“We have listened to much talk from the government about the UK being in a global economic race and the importance for the UK to become more competitive, yet airlines, amongst the most global of businesses; continue to be hammered by the highest aviation tax in the world. The government has built a veritable ‘wall of tax’ around the UK which international travellers and airlines are increasingly overflying.”

However, there are other aspects to the budget which are likely to be to the benefit of airlines, as well as shipping lines and shipowners. According to specialist shipping accountancy firm Moore Stephens, capital gains structures have been simplified to the benefit of asset owners. It said that last year the government announced that where a company had a functional currency other than sterling, capital gains and losses on disposals of shares would with effect from April 2013 be calculated in that functional currency rather than in sterling.

Moore Stephens tax partner Sue Bill said: “Now, following representations by Moore Stephens and others, it has been announced that this measure has been extended to cover the disposal of ships and aircraft as well as shares, thus removing an anomaly in the calculation of capital gains and losses arising on ships outside the UK tonnage tax regime.

“Where ships are held outside the UK tonnage tax regime, capital allowances (or tax depreciation) is available in respect of the capital cost of the ship.  For many years, no first-year allowances – being accelerated capital allowances available in the year of acquisition – have been available in respect of ships. This exclusion from claiming first-year allowances has now been removed for ships and railway assets.

She cautioned however, that it “may be of limited benefit as first-year allowances are currently only available in respect of a limited number of assets, in particular energy-efficient and environmentally beneficial plant and machinery of a description specified by Treasury order, which can qualify for 100% allowances in the first year.  Therefore it is not yet clear how beneficial the removal of this anomaly will be in practice.”

However, she concluded that the 2013 Budget “is generally good news for the shipping sector as the UK government is clearly looking to ensure that the UK tax system is as competitive as possible”.

Comment on this article


You must be logged in to post a comment.