How The 2015 Budget Affects The Motorist

By Kevin | 6th May 2015 | Category: Blog | Leave a comment

Drivers licence, petrol receipt and moneyWith an election to prepare for, Chancellor George Osborne made sure in his last Budget that he kept everyone happy - or at least not make them too unhappy; and drivers weren't exempt from the benefits on offer.

THE EVERYDAY DRIVER

Fuel duty

With oil prices falling, Mr Osborne was fully aware that any increase in fuel duty would be seen as a money-making policy - so once again fuel duty was frozen, and the 0.54p-per-litre duty escalator that was due to kick in in September 2015 was postponed. According to The Chancellor, this move saves drivers around £675 a year (by 2016) with hauliers in particular benefiting to the tune of around £21,000 a year - and he was also quick to point out that this current fuel duty freeze (which has lasted 5 years) is longest fuel duty freeze for two decades.

Looking for everyday ways to save money on petrol? Check out our useful guide to fuel economy.

Petrol in remote areas

Not many people know that in certain remote areas of the UK, retailers can apply for what is known as a rural fuel rebate which is 'supposed' to be passed on in some way (or in some proportion) to the motorist. In the Budget it was announced that there will now be 17 areas of the UK where retailers can apply for the 5p per litre fuel duty discount.

But there is no guarantee that any of this will be passed on to the motorist.

Road tax

Sadly there was no freeze on the annual road tax for car, van and motorcycle drivers, the cost of which rises from April 1st 2015 by the rate of inflation decided by the Retail Price Index. But if you are the driver of an HGV, both the Vehicle Excise Duty and Road User Levy Rates were frozen until 1st April 2016.

Drivers of non-commercially driven Classic cars manufactured before 1 January 1975 continue to pay no Vehicle Excise Duty.

The roads upon which we drive

With the election a mere 50 days or so away, there was no surprise that the Chancellor proudly updated us all with what has been going on with the UK roads.

Detailing completed schemes (15 of them at a cost of £3.4 billion) and schemes underway (16 of these at an estimated cost of £2.3bn) underway, there were details of proposed projects that include upgrades to roads such as the A1, M62, M1, A556 and Mersey Gateway Bridge and the old favourite (yet to be realised) of a tunnel that would run under Stonehenge.

There was also a bit of a curve ball thrown in by Mr Osborne with a reduction (in 2018) in the M4 'Welsh Tax' otherwise known as the toll price on the Severn bridge.

THE COMPANY CAR DRIVER

Company car tax

Over the past few years, the tax on Company Cars has been a real bone of contention as the Government tried to get company car users to move to more fuel efficient cars whilst trying to be 'fair'.

In this Budget, the rates were changed when it comes to the percentage of the list price that is subject to tax.

• In 2017-18, the percentage on cars with CO2 emissions above 75g/km will increase by 2% to a maximum of 37% - right through to 2018-19. This figure will increase by 3% (again up to 37%) in 2019-20.
• In 2017-18, on cars between the 0-50 and 51-75g/km bands, and between the 51-75 and 76-94g/km bands there will be a 4% differential - which will decrease to 3% in 2018-19. 

More and more companies are choosing to lease their vehicles

Andrew Hogsden, Lex Autolease senior manager for fleet consultancy, stresses that it is "...even more important for businesses to identify vehicles with low CO2 emissions that are both fit for purpose and attractive to drivers. Fortunately companies now have considerably more choice when it comes to reducing CO2 emissions. They should also consider new and alternative technologies, which will become increasingly available by 2019, as well as best in class traditional fuels."

Choosing fuel efficient vehicles isn't the only way businesses can save money on their vehicles. Leasing rather than owning cars or vans can also have positive tax implications. For example, on a business contract hire agreement, up to 50% of the rental for cars and 100% for commercial vehicles can be claimed back.

Visit our Guide to Vehicle Business Leasing for more details. 

Fuel Benefit Charge

Keeping on the Company Car changes, the fuel benefit charge multiplier that is used when looking at private fuel use in company cars increases from £21,100 to £21,700 from 6 April 20154, continuing to decrease this particular company car benefit. This is in keeping with the Retail Price Index.

THE FUTURE FOR CARS

Investment in autonomous cars

Driverless cars is an innovation that the Government wants the UK to lead, so George Osborne announced a new £100 million investment that will be matched by some business leaders to create a Centre of Excellence for autonomous cars where research can be undertaken into the cars and the computer and telecoms technology required to make these cars a reality.

As The Chancellor said, the money is there to help the UK’s “brilliant automotive industry ... to stay ahead in the race to driverless technology”.

So now it is over to bidding companies aiming to grab their share of the funding to take part in a series of competitions, with projects involving the automotive, telecoms, IT and infrastructure sectors, before explaining how they would all work together to make autonomy work with cars connecting not only to each other but to the whole transport system as a whole.

Needless to say, if this is George Osborne's last budget (for a while), for car drivers it isn't bad, and it isn't brilliant. More Corsa than Fabia, and more Focus than Berlinetta.

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