Announcements made by the Chancellor ironically leave drivers of the environmentally friendly cars paying more than they would have done before the changes. Those in Band B (101-110g/km CO2) such as the Mini Diesel, Toyota Prius and Volkswagen Polo Blue Motion will pay £35 tax in 2009 instead of the planned £20 making them £15 worse off.
The new rises for vehicle excise duty still apply to cars bought between 2001 and 2006 but there will be a partial reprieve as there will be a more gradual introduction. From April next year there will be as planned six new VED bands taking the total to 13 but rates will not increase from what they are now by more than £5 for any car in 2009. From April 2010 the rates in the 13 bands will change again for existing cars. Originally the proposal would have increases of up to £90 but now the increase for more polluting cars will be a maximum of £30. There will be a separate ‘first year rate’ for new vehicles starting at zero for the cleanest and reaching £950 for the highest polluters.
Britain’s motorists will be hit by a rise at the fuel pumps. Three duty rises at the pumps totalling 5p a litre starting with 2p a litre from Monday will wipe out much of the benefit of recent price falls at the pump. Britain’s motorists will now have the most heavily taxed fuel in the EU.