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Motorists set to pay £1 billion a year after 'stealth' insurance tax hike

Budget 2015 reaction: SMMT ‘surprised’ by new road tax bands

George Osborne

The Society of Motor Manufacturers and Traders (SMMT) has expressed surprise and concern about the new car tax bands announced by George Osborne during yesterday’s budget.

Under the new Vehicle Excise Duty (VED) bands, all cars with a list price of £40,000 will be subject to a £310 supplement on top of regular road tax for the first five years.

While zero-emission cars will still be taxed favourably, there will be no incentive to buy a low-emission or hybrid vehicle.

SMMT chief executive Mike Hawes said: “The Chancellor’s Budget announcement on the regime came as a surprise and is of considerable concern. While we are pleased that zero-emission cars will, on the whole, remain exempt from VED, the new regime will disincentivise take-up of low emission vehicles. New technologies such as plug-in hybrid, the fastest growing ultra low emission vehicle segment, will not benefit from long-term VED incentive, threatening the ability of the UK and the UK automotive sector to meet ever stricter CO2 targets.”

In a bid to prove the Conservatives are no longer the party of the rich, Osborne said the new tax bands won’t be applied to cars bought before 2017 – but those with a list price of more than £40,000 bought after 2017 will pay more.

This will affect British-built cars such as the Land Rover Discovery and high-spec models of the new Jaguar XE – and even efficient hybrids such as the Lexus RX450h.

Hawes added: “The introduction of a surcharge on premium cars also risks undermining growth in UK manufacturing and exports. British-built premium cars are in increasing demand at home and globally, and the industry helps to support almost 800,000 jobs in the UK. Levelling a punitive tax on these vehicles will almost certainly impact domestic demand.”

Potholes warning sign

RAC welcomes new Roads Fund

A big change as part of Osborne’s budget is that ‘every penny’ raised through VED will go into a new fund for the maintenance of roads. The RAC has welcomed the move.

RAC chief engineer David Bizley said: “Today’s budget announcement on Vehicle Excise Duty marks a return to the days when road tax was collected and used to fund improvements in the road network. As new cars become more efficient, VED was always destined to bring in less and less money for the Treasury. For the first time, motorists will be able to see for themselves how the money they pay benefits the road network that they use – although it is a pity that we will have to wait five years for the Roads Fund to take effect.”

Road Surface Treatments Association demands more

The Road Surface Treatments Association (RSTA) has also welcomed the Roads Fund, but insisted more is needed.

RSTA chief executive Howard Robinson said: “For many years we have called for the monies raised from road taxation to be ring-fenced and used for the purposes that the road tax was set-up for.

“Road taxes raise some £6 billion a year whilst fuel duty raises a further £27 billion. More of this money should be invested into long-term road maintenance that addresses the £12 billion necessary to bring our road network up to a reasonable standard.”

Fuel

Fuel duty freeze could result in nasty surprise

As part of yesterday’s budget, George Osborne also said he would be continuing to freeze fuel duty. The RAC has warned that this could result in a nasty surprise for motorists if it’s increased in 2016.

RAC chief engineer David Bizley said: “By freezing fuel duty for the rest of the year the Chancellor has continued his good record of helping to ease the travel and transport costs of individual motorists and businesses alike, but this sounds alarm bells for next year as by not extending the freeze further it potentially signals the country’s first increase in duty since 2011.

“While oil prices are expected to stay low, the oil market is notoriously hard to predict, so there is always the chance that fuel prices will be considerably higher by the time of the Budget in March 2016. Any increase in duty would therefore have a negative effect on the economy.”

Motoring journalist Quentin Willson has also spoken out as part of the Fair Fuel campaign. He said: “FairFuelUK is pleased that Mr Osborne is to continue to freeze fuel duty. Our 1.1m supporters will be somewhat happier that, whilst this tax still remains the highest in the EU, a freeze will help keep their high road transport costs somewhat lower than what was rumoured to be introduced in this Budget.

“Our recent empirical economic evidence sent to all MPs and the Treasury has made them realise that 40m UK drivers will not tolerate being used as that continual cash tax cow. The fight goes on for a cut!”

Motorists set to pay £1 billion a year after 'stealth' insurance tax hike

Budget 2015 reaction: SMMT 'surprised' by new road tax bands

George Osborne

The Society of Motor Manufacturers and Traders (SMMT) has expressed surprise and concern about the new car tax bands announced by George Osborne during yesterday’s budget.

Under the new Vehicle Excise Duty (VED) bands, all cars with a list price of £40,000 will be subject to a £310 supplement on top of regular road tax for the first five years.

While zero-emission cars will still be taxed favourably, there will be no incentive to buy a low-emission or hybrid vehicle.

SMMT chief executive Mike Hawes said: “The Chancellor’s Budget announcement on the regime came as a surprise and is of considerable concern. While we are pleased that zero-emission cars will, on the whole, remain exempt from VED, the new regime will disincentivise take-up of low emission vehicles. New technologies such as plug-in hybrid, the fastest growing ultra low emission vehicle segment, will not benefit from long-term VED incentive, threatening the ability of the UK and the UK automotive sector to meet ever stricter CO2 targets.”

In a bid to prove the Conservatives are no longer the party of the rich, Osborne said the new tax bands won’t be applied to cars bought before 2017 – but those with a list price of more than £40,000 bought after 2017 will pay more.

This will affect British-built cars such as the Land Rover Discovery and high-spec models of the new Jaguar XE – and even efficient hybrids such as the Lexus RX450h.

Hawes added: “The introduction of a surcharge on premium cars also risks undermining growth in UK manufacturing and exports. British-built premium cars are in increasing demand at home and globally, and the industry helps to support almost 800,000 jobs in the UK. Levelling a punitive tax on these vehicles will almost certainly impact domestic demand.”

Potholes warning sign

RAC welcomes new Roads Fund

A big change as part of Osborne’s budget is that ‘every penny’ raised through VED will go into a new fund for the maintenance of roads. The RAC has welcomed the move.

RAC chief engineer David Bizley said: “Today’s budget announcement on Vehicle Excise Duty marks a return to the days when road tax was collected and used to fund improvements in the road network. As new cars become more efficient, VED was always destined to bring in less and less money for the Treasury. For the first time, motorists will be able to see for themselves how the money they pay benefits the road network that they use – although it is a pity that we will have to wait five years for the Roads Fund to take effect.”

Road Surface Treatments Association demands more

The Road Surface Treatments Association (RSTA) has also welcomed the Roads Fund, but insisted more is needed.

RSTA chief executive Howard Robinson said: “For many years we have called for the monies raised from road taxation to be ring-fenced and used for the purposes that the road tax was set-up for.

“Road taxes raise some £6 billion a year whilst fuel duty raises a further £27 billion. More of this money should be invested into long-term road maintenance that addresses the £12 billion necessary to bring our road network up to a reasonable standard.”

Fuel

Fuel duty freeze could result in nasty surprise

As part of yesterday’s budget, George Osborne also said he would be continuing to freeze fuel duty. The RAC has warned that this could result in a nasty surprise for motorists if it’s increased in 2016.

RAC chief engineer David Bizley said: “By freezing fuel duty for the rest of the year the Chancellor has continued his good record of helping to ease the travel and transport costs of individual motorists and businesses alike, but this sounds alarm bells for next year as by not extending the freeze further it potentially signals the country’s first increase in duty since 2011.

“While oil prices are expected to stay low, the oil market is notoriously hard to predict, so there is always the chance that fuel prices will be considerably higher by the time of the Budget in March 2016. Any increase in duty would therefore have a negative effect on the economy.”

Motoring journalist Quentin Willson has also spoken out as part of the Fair Fuel campaign. He said: “FairFuelUK is pleased that Mr Osborne is to continue to freeze fuel duty. Our 1.1m supporters will be somewhat happier that, whilst this tax still remains the highest in the EU, a freeze will help keep their high road transport costs somewhat lower than what was rumoured to be introduced in this Budget.

“Our recent empirical economic evidence sent to all MPs and the Treasury has made them realise that 40m UK drivers will not tolerate being used as that continual cash tax cow. The fight goes on for a cut!”

Blog: could motorists be forced to pay millions more in tax to compensate for exaggerated efficiency figures?

Summer budget 2015: free road tax axed for petrol and diesel cars

Summer budget 2015: free road tax axed for petrol and diesel cars

George Osborne has announced in his summer budget that new cars will be subject to different vehicle excise duty (VED) bands from 2017.

The new system is still based on CO2 emissions, but only cars emitting 0g/km CO2 will benefit from free road tax.

Apparently, 95% of new cars will fit into a ‘standard’ category, costing £140 per year, while cars that cost over £40,000 new will face an extra £310 per year for the first five years.

Osborne said: “Because so many new cars now fall into the low-carbon emission plans, by 2017 over three quarters of new cars will pay no VED at all in the first year.

“This isn’t sustainable and it isn’t fair. If you can afford a brand new car, including some of the most expensive models available, you can pay no VED. If you can only afford an older second-hand car you have to pay more tax.”

Summer budget 2015: free road tax axed for petrol and diesel cars

The new VED bands will only apply to new cars from 2017 onwards – Osborne insists no one will pay more in tax for vehicles they already own.

Anyone spending more than £40,000 on a new car will have a pay an additional £310 a year in road tax for the first five years.

That means even electric cars worth over £40,000 new, such as the Tesla Model S, will cost £310 to tax.

Anything with a conventional engine, including hybrids, will cost £450 a year in VED for the first five years if it has a list price over £40,000.

Another big change is that the money raised through VED will go directly back into improving the roads.

Osborne added: “I will return this tax to the use for which it was originally intended. I am creating a new roads fund from the end of this decade – every single penny raised from VED in England will go into that fund to pay for that sustained investment our roads so badly need.”

The Chancellor also announced he would consult on the current MOT system, looking at increasing the age at which cars and motorbikes require their first test from three to four years.

Fuel duty will also remain frozen at the current rate.

Budget 2015 reaction: has Osborne done enough to help motorists?

Budget 2015 reaction: has Osborne done enough to help motorists?

Budget 2015 reaction: has Osborne done enough to help motorists?

George Osborne has announced his pre-election budget, with a freeze on fuel duty dominating headlines for motorists. Is it enough to help drivers save money at the pumps, or should the Chancellor have done more to secure our votes in May?

Read more

Motorists set to pay £1 billion a year after 'stealth' insurance tax hike

Budget 2015: £100m investment for driverless cars

George Osborne

George Osborne has announced a £100m investment into driverless car technology as part of his pre-election budget.

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Blog: could motorists be forced to pay millions more in tax to compensate for exaggerated efficiency figures?

Budget 2015: fuel duty will remain frozen

Budget 2015: FairFuelUK urges Chancellor to cut fuel duty

Chancellor George Osborne has announced that he will again freeze fuel duty as part of his pre-election budget.

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Average petrol prices could drop below £1 over Christmas

Budget 2015: FairFuelUK urges Chancellor to cut fuel duty

Budget 2015: FairFuelUK urges Chancellor to cut fuel duty

Campaign group FairFuelUK has written to George Osborne thanking him for previous fuel duty freezes – and asking him to cut fuel duty by 3p per litre in today’s budget.

Read more