With key points relating to fuel, Vehicle Excise Duty (VED) and company car tax brought up in the 2014 Budget, we wanted to bring motorists a round-up of announcements that would affect them.
So here are the key motoring-related announcements from the Budget 2014.
In his Budget speech, the Chancellor confirmed that September’s planned 1.6p per litre rise in fuel duty, announced in his Autumn Statement 2013, was cancelled.
This means that there will not be a rise in fuel duty prior to the 2015 general election – which is good news for motorists everywhere.
In addition, Osborne has announced that legislation will be introduced in the Finance Bill 2015 to apply a reduced rate of fuel duty to methanol that is composed of 95% pure methanol and 5% water. This will be implemented from April 1st 2015.
The rate of fuel duty applied to methanol will be 9.32p per litre, while the size of the duty differential between the main rate and methanol will be maintained until March 2024.
Furthermore, the Government has said that it will review the impact of the incentive alongside the duty incentives for road fuel gases at the 2018 Budget.
Vehicle Excise Duty
On April 1st 2014, the 2014 Vehicle Excise Duty (VED) rates for cars, motorcycles and the main rates for vans will increase by the Retail Price Index (RPI).
Osborne has also stated that the Government will freeze the VED rates for Euro 4 and Euro 5 light goods vehicles in 2014/15.
However, as announced in the 2013 Budget, the Government will reduce and re-structure VED rates for HGVs within the HGV Road User Levy scheme. This will take place from April 1st 2014.
The Government will also be introducing a rolling 40-year VED exemption for classic vehicles from April 1st this year. This means that vehicles constructed 40 or more years ago will be exempt from VED on an automatic rolling basis on April 1st each year.
The Chancellor confirmed that, as announced in last year’s Autumn Statement, a paper tax disc will no longer be issued and required to be displayed on a vehicle’s windscreen from October 1st 2014 – in a bid to simplify VED administration.
In addition, motorists will be able to pay their VED by direct debit. This can be done annually, bi-annually or monthly, although a 5% surcharge will apply to bi-annual and monthly payments.
Vehicle Excise Duty from April 1st 2014 for cars registered on or after March 1st 2001
VED bands and 2014/15 rates for vans registered on or after March 1st 2001
Early Euro 4 and Euro 5 compliant vans - £140
All other vans - £225
Company car tax
The Chancellor’s Budget papers set out the company car Benefit-in-Kind (BiK) tax rates for 2017/18 and 2018/19. The papers also confirmed previously announced rates for the years up to and including 2016/17 – including the removal of the 3% diesel supplement.
In 2017/18 and 2018/19, the appropriate percentage of list price subject to tax will increase by two percentage points for cars that emit more than 75g/km of CO2 – to a maximum of 37%.
Osborne has, however, changed his mind in relation to previously announced increases in rates for the two lowest thresholds, which are 0-50g/km and 51-75g/km, and altered the differential between those rates and the 76-94g/km threshold.
Back in the 2013 Budget, the Chancellor said that the differential between the 0-50 and 51-75g/km CO2 bands and between the 51-75 and 76-94g/km bands would be three percentage points in 2017/18, reducing to two percentage points in 2018/19.
However, he changed his mind in the 2014 Budget and said that the differential would be four percentage points and three percentage points, respectively. He stated that it was a mechanism through which he could incentivise the take-up of ultra low emission vehicles.
In the small print of the 2014 Budget papers, it was revealed that the increases in company car tax are forecast to generate an additional £240 million for HM Treasury in 2017/18 and £480 in 2018/19.
The papers also revealed that the differential would reduce further to two percentage points in 2019/20.
Osborne added that the Government remained committed to reviewing incentives for ultra low emission vehicles, in light of market developments at Budget 2016, to inform decisions on company car tax from 2020/21 onwards.
The Government has recently thrown its weight behind the ‘Go Ultra Low’ campaign.
Car fuel benefit charge 2014/15
Business employees who are in receipt of company-funded fuel used privately will see their BiK tax bills rise from April 6th 2014 onwards.
The Chancellor has announced that the fuel benefit charge multiplier for company cars will increase from £21,100 in 2013/14 to £21,700 in 2014/15.
Furthermore, the multiplier will once again increase by RPI from April 6th 2015.
Van benefit charge 2014/15
The Chancellor has announced that the van BiK tax charge will increase from £3,000 in 2013/14 to £3,090 in 2014/15. From April 6th 2015, the charge will once again increase by RPI.
However, Osborne has said that the Government will extend van benefit charge support for zero emission vans to April 5th 2020 on a tapered basis.
For five years until the end of 2014/15, zero emission vans were exempt from BiK tax. From 2015/16, however, the charge paid by zero emission vans will be 20% of the rate paid by conventionally fuelled vans.
This is followed by 40% in 2016/17, 60% in 2017/18, 80% in 2018/19 and 90% in 2019/20, with the rates set to equalise in 2020/21.
The Government has stated that it will review van benefit charge support for zero emission vans in light of market developments at Budget 2015.
Van fuel benefit charge 2014/15
From April 6th 2014, the van fuel benefit charge multiplier will increase from £564 to £581. In addition, the multiplier will once again increase by RPI from April 6th 2015.
Enhanced Capital Allowances
The Government will extend the enhanced capital allowances for zero emission goods vehicle to March/April 2018, as mentioned in the Budget 2014.
However, in order to comply with European Union state aid rules, the availability of the allowance will be limited to businesses that do not claim the Government’s Plug-in Van Grant.
Chancellor George Osborne announced a £200 million “potholes challenge fund". Billed as “emergency funding", local authorities will be able to bid for the money to repair up to 3.2 million potholes following the recent severe weather.