Chancellor George Osborne announces changes that affect UK motorists.
George Osborne has delivered the first Tory budget in a generation, with UK motorists seeing changes to MOT, VED and tax on car insurance.
The news isn’t quite the ‘End of the War on Motorists’ promised by Philip Hammond when he was Transport Secretary, but there’s nothing that should raise the ire of car owners too much either.
The main areas addressed by Osborne were the current Vehicle Excise Duty (VED or Road Tax), tax on insurance premiums, Fuel duty and MOTs.
Vehicle Excise Duty
We’ve long bemoaned basing VED on CO2 emissions, and although that will still continue – to a degree – there are changes that will make emissions less related to tax.
The existing road tax system will change for new cars in 2017, with duty based on emissions for the first year only, after which there will be just three bands – zero-emission, standard and premium – with 95 per cent of cars landing in the standard band and paying £140 a year. The premium band will be reserved for cars with a list price of over £40,000, and they will pay £450 a year.
There will be no changes to VED for cars built before the new system comes in to effect – they will continue to pay based on the current CO2 bands.
Road Fund
A big moan by motorists is that we pay huge amounts in VED, yet our roads are falling apart.
Osborne has decided we should revert to the original VED promise from the 1930s, and that all money raised from VED in England will be used to improve existing roads, and build new ones.
Bemoaning the fact that the UK has built just 300 miles of new motorway in the last 25 years – whilst the French have built 2500 miles – Osborne has promised that every single penny in the fund will used to improve roads from 2020.
Car Insurance Premium Tax
There’s an increase in insurance premium tax – which actually applies to all insurance policies, not just car insurance – which means the current rate of 6 per cent increases to 9.5 per cent, probably adding around £10 a year to the average car insurance policy.
MOT – Only after four years
As a nod to the ever-improving build quality of cars, Osborne has announced that he wants the first MOT to be due after four years, rather than the current three. It seems he will ‘consult’ on this before implementing it, but if he does it will save motorists £100 million a year (but won’t help MOT garages’ business much).
Fuel Duty Frozen
Despite fears that fuel duty would be increased, Osborne announced that there will be no increase in fuel duty this year.
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