Extensive tax breaks must be reinstated by the government to support business investment in EV equipment and training if the aftermarket is to be future-proofed, the Institute of the Motor Industry (IMI) has demanded.
The lobby group added that introducing financial incentives to encourage new EV sales “misses the significance of ensuring the aftermarket is effectively trained and equipped to support zero emissions motoring”.
Chancellor Jeremy Hunt, therefore, must reinstate the super-deduction – which allows firms to cut their tax bill by up to 25p for every £1 they invest – as part of the upcoming Spring Budget, the IMI said. It was originally introduced by Prime Minister, and then-Chancellor, Rishi Sunak in 2021.
“If the government is genuinely committed to reducing carbon emissions it not only needs to stimulate the market; it also needs to ensure the aftermarket sector is adequately equipped and trained to support EV drivers,” said IMI CEO Steve Nash.
“We, therefore, hope that the Treasury is giving serious consideration to reinstating the super- deduction (130% first-year capital allowance for qualifying plant and machinery assets; and 50% first-year allowance for qualifying special rate assets) as well as reducing rates to help motor businesses invest in equipment and skills for new technologies.
“The Full Expensing 100% first-year capital allowance for qualifying plant and machinery assets introduced in March 2023 really doesn’t go far enough.”
The IMI also wants the Chancellor to ensure focus remains on rebuilding the UK economy “with a skilled workforce”.
It believes this can be achieved through increased funding for apprenticeships; support for SMEs to offer apprenticeships; FE Lecturer Funding; Adult Education Support and better financial support for apprentices, including free bus travel and a review of how apprentices who are also caregivers can benefit from Universal Credit.
“Although the government made the decision last September to move the deadline back to 2035 for the ban on the sale of new petrol and diesel vehicles, the passing of the ZEV mandate into law this January means that many businesses that operate in the automotive aftermarket still need to be EV ready if they want to be part of the road to zero”, said Nash.
“Yet they are faced with significant costs for equipment and training and little immediate incentive in the form of customer demand.”
Nash concluded: “Clearly the Chancellor will be focused on supporting every individual and business that has been hit by the cost of living crisis over the last 12-18 months. We hope that this strategy doesn’t miss the significance of how important the automotive sector is to the UK’s economic and social infrastructure as a whole.”
Go to comments