Chancellor George Osborne Budget red box

Budget 2016 key points for motorists: at-a-glance guide and reaction

Chancellor George Osborne Budget red boxBudget 2016 is rumoured to have significant implications for motorists with Chancellor George Osborne set to announce a number of policy changes.

Here we run through the key points for motorists and also bring you reaction from across the automotive industry.

It took the Chancellor almost 40 minutes of economy scene-setting to address what’s in store for motorists. What did he announce?

Top 5 motoring takeaways

  1. Fuel duty frozen
  2. Investment in driverless and connected cars
  3. Insurance Premium Tax to rise by 0.5%
  4. £230 million of motorway, A-road and Trans-Pennine Tunnel schemes in the north
  5. Severn Crossings tolls halved from 2018

Budget 2016 key points for motorists

  • From 2018, tolls on the Severn Crossings between England and Wales will be halved. Cars currently pay £6.60, vans pay £13.20 and HGVs pay £19.80. Motorcycles are free
  • £230 million set aside for road initiatives in the north will see the M62 upgraded to four lanes, and upgrades for the A66 and A69
  • Investment will go into developing a case for a tunnel road between Manchester and Sheffield – the so-called Trans-Pennine Tunnel.
  • Crossrail 2 and HS3 have both been given the green light
  • Insurance Premium Tax will rise from 9.5% to 10%. The money will go into boosting flood defences
  • Fuel duty will be FROZEN for the sixth year running
  • The surprise fuel duty freeze will, says the Chancellor, save the average motorist £75 a year and the average small businessman with a van £270 a year. It’s “the tax boost that keeps Britain on the move”
  • The Chancellor made NO announcement about investment in driverless car legislation during his Budget 2016 announcement…
  • … but Budget 2016 documentation confirmed the government will conduct trials of driverless cars on the strategic road network by 2017
  • Consultation on removing regulatory barriers to autonomous vehicles on major English roads will commence in summer 2016
  • A £15 million connected corridor from London to Dover will trial car-to-car and car-to-X communications
  • Trials of comparative fuel price signs will begin by spring 2016 on the M5 motorway between Bristol and Exeter
  • The Chancellor announced the allocation of the £50 million Pothole Action Fund for England in 2016-17: it will allow local authorities to fill a million potholes. A further £130 million has been allocated to fix roads and bridges damaged by Storm Desmond and Storm Eva
  • Company car users, listen up: the main threshold for capital allowances for business cars will be cut to 110g/km CO2 (from 130g/km) from April 2018; the First Year Allowance threshold reduces to 50g/km (from 75g/km). This reflects falling vehicle emissions
  • The 100% First Year Allowance for low emission cars will be extended for three years to April 2021
  • Company car tax will continue to be based on CO2; consultation on how to treat ultra-low emission vehicles beyond 2020-21 will get underway

Budget 2016: reaction


Chief engineer David Bizley said “motorists will be relieved that the Chancellor has not used low fuel prices as an opportunity to raise duty on petrol and diesel – but, with the government’s own evidence showing that lower fuel prices are good for the economy, we are disappointed Mr Osborne didn’t make a longer-term commitment to freeze duty beyond next year’s Budget”.


“The 2016 Budget contained some positive measures and we were pleased to see the Chancellor recognise SMMT’s call for greater support for energy efficient technologies, through both the extension of Climate Change Agreements and a forthcoming consultation on the future Company Car Tax treatment of ultra low emission vehicles,” said SMMT chief executive Mike Hawes. “However, we were disappointed that the Chancellor has not done more on business rate reform. The removal of plant and machinery from business rates valuation would have encouraged investment in innovative manufacturing technologies, improving still further UK automotive industry productivity and safeguarding our competitiveness.”


Speaking of the company car implications, Deloitte’s Simon Down said “a reduction in the First Year Allowances threshold will mean that only plug-in hybrids or electric vehicles will attract the 100% first year rate of capital allowance. These are the only vehicles currently available with CO2 emissions below the 50g/km threshold.” Factor in the other fleet car details of Budget 2016 will make “employers and employees move to company cars with lower CO2 emissions a more pressing financial incentive”.


Nissan will launch a UK-built Qashqai equipped with piloted drive technology in 2017: chairman of Nissan Europe Paul Willcox said the firm “welcomes the measures announced by the Chancellor today. These plans will support the development and growth of autonomous vehicle technology in the UK”.

Freight Transport Association

Freezing fuel duty is “good but not great” says the FTA. “The Chancellor missed a chance to give a boost to the stuttering economy by reducing the tax on an essential business input,” said FTA policy expert James Hookham. It estimates “every penny of fuel duty costs CV operators £120 million a year, and a 3ppl cut would have saved around £350 million a year for an industry that all British businesses rely upon.”

Road Haulage Association

“George Osborne does his duty” says the RHA. “The Chancellor’s decision to freeze duty will keep money in people’s pockets – money that will help retailers and provide a sound base for economic recovery.”


Quentin Willson of FairfuelUK described freezing fuel duty as “hugely significant. The Treasury now has five years of evidence to prove that keeping fuel duty low has helped improve GDP, stimulate economic activity and actually improve tax receipts. The Chancellor knows that low transport costs have had an enormous economic benefit to the UK over the last five years”.


“The Chancellor forgot to mention a little thing called climate change” said Ecotricity founder Dale Vince, “and in the same week that NASA called February’s global temperatures ‘stunning’ and scientists from around the world declared a climate emergency. What is this budget, and this Chancellor, doing? Very little it seems.”

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