Summer 2015 Emergency Budget – What It Means for Motorists

All eyes were on Osborne when he mentioned fuel duty. In short, how much tax the Government slaps onto pump prices, currently just under 58p per litre.

There have been countless scheduled rises over the last few years but on each occasion they’ve been cancelled each time. As it stands, fuel duty has been left unchanged since the start of 2011 and Osborne reaffirmed that fuel duty will remain frozen until the end of 2015.

The current Vehicle Excise Duty system means that 75% of brand new cars will not be contributing any taxes due to the low emissions achieved by modern cars. This is not sustainable and must be addressed. By 2017, there will be a minimum annual ‘road tax’ amount of £140 for ‘standard’ cars. The tax rate will remain at £0 for Electric Vehicles. It is unfair that those who can afford brand new cars are paying zero tax, while those who can only afford older, used cars will be paying more tax.

All money obtained through road tax will contribute to maintaining the roads, instead of being contributed to a general ‘pot’. Osborne stated we’ve only built 300 miles of new road over the last 25 years.

Osborne didn’t announce any changes to the current Benefit In Kind (BIK) company car tax bands. However, we’d expect this to change during the next budget after he announced the government will be taxing low emission vehicles.

The point at which people start paying income tax at 40p is to rise from £42,385 to £43,000 next year (2016). Osborne said this change will affect over 130,000 40% tax payers and we assume a fair amount of these drive company cars.

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Insurance Premium tax will be raised to 9.5% from 6% as of November - this is likely to affect car insurance premiums however further consultations will be required before this is finalised.

Whereas previously all brand new cars would not need an MOT check within the first 3 years of its life on the roads, Osbourne has stated a consultation will proceed whereby this is extended to 4 years. Not only will this save consumers money, but also increase the value of Used Car stock between 2-3 years old.

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