Businesses as well as families in the UK are bracing themselves for the double impact of increased fuel duty and VAT being added to their already mountainous economic woes.
With an extra 2p per litre being added to fuel duty from 1st September (and with VAT set to return to 17.5% by the end of the year) organisations such as the AA have warned that it will increase the already strained purse strings of motorists. Businesses are set to be hit particularly hard with the average cost of a tank of petrol set to rise to £1.16, an increase of over 25% since 2007.
Although the government sees these rises as a way to potentially reduce the UK’s carbon emissions and raise much needed revenue for its empty coffers, it hasn’t calculated the impact that it will have on the cost of running a business; especially as the amount of money raised through corporation tax has fallen.
Businesses will therefore need to look at other ways in which to reduce their overheads, significantly those which use lorries and vans for deliveries, ensuring that there is no significant impact on the services they offer. For example, reducing the cost of commercial vehicle insurance to a cheaper policy is something that is already beginning to happen.
Insurer development manager at Swinton, Steve Chelton, said:
“Motorists have seen petrol prices escalate since the start of 2009 and although diesel costs have risen at a slower rate, prices for both will jump today due to the latest duty hike. Cash strapped Brits are choosing to cut their outgoings and Swinton has seen a significant increase in the number of policies taken out for smaller engine vehicles which are cheaper to insure, tax and refuel.”
Looking ahead it is expected that there will be no respite as surging oil prices and rising demand are also contributing to the spiralling cost of petrol prices, with last week’s average of 105.02p per litre the highest level since mid-October 2008. It has been suggested that the upcoming increase in fuel duty could potentially cost the UK’s van insurance customers and other road users more than £36 million more in the next month.
