Having announced his fiscal plans for the future, in what many have dubbed ‘The Millionaires’ Budget’, George Osborne has put his tin hat on and taken cover in Number 11 for the foreseeable. It wasn’t too bad for some, but it wasn’t good for others, either. And, as seems to be the trend on Budget Day, Britain’s motorists had to take a harder-than-usual punch to the stomach, and wince while everyone else pointed and laughed.
Below are the main points that will affect motorists the most, for families and businesses alike:
George Osborne presents the 2012 Budget in the House of Commons
With campaigners lining the streets of Westminster, the Chancellor announced that he had no intention of diverting from his pre-planned course of raising adding a fixed rate of fuel duty by 3.02 pence a litre, taking it to 60.97 pence. Said campaigners got very angry, wore George Osborne masks and made themselves known – and who can blame them? Petrol prices are already at a record high, and when VAT is accounted for, August 1’s hike will see petrol prices hit a staggering 3.62p a litre. Petrol currently averages 139.67 pence a litre, whilst Diesel averages 146.39 pence a litre.
So, how much are you willing to pay for your black gold? Will you sit back and take it on the chin, or will you buy a new car that’s more fuel-efficient and less likely to hit you in the wallet?
Quite a sneaky one, this - road tax will rise in line with current inflation rates from 1 April 2012, meaning extra costs for cars classed in Band D and beyond. Bands A – C will see no increase, but hefty gas-guzzling brutes are likely to exceed the Vehicle Excise Duty (VED) tax past the thousand pound mark for the first time in its history. There was some good news though, as it was revealed that VED would be frozen for hauliers.
Are you a haulier? Do you welcome the news, and will it be good for your business? Or are you going to be feeling the pinch simply because of the car you own? Would you be more inclined to consider a car leasing comparison with this in mind?
Osborne addresses the house during Budget 2012
Company Car Tax
There were was little joy for those with a company car, especially for those that have championed an eco-friendly business model.
From April 2016 the three percentage point diesel supplement differential will be removed, meaning diesel-based cars are going to be taxed in the same way as normal petrol vehicles – but not before seeing a rise in the preceding years through yearly tax increases...
The biggest concerns have been reserved for business owners that make use of a green car. The Finance Act 2010 outlined a five-year exemption for zero carbon and ultra low carbon emission vehicles, with that coming to its natural conclusion in April 2015. Zero emission and low carbon vehicles will be taxed at 13 per cent from April 2015, increasing by two percentage points in 2016–17. Yikes!
The overall message was that Chancellor wants to raise £1.6 billion over the next five years by reducing capital allowances for company cars and introducing higher taxes for employees. Do you have a company car? How will you be affected by these announcements? Would you consider ditching the company car as an employee and taking on a personal contract purchase deal instead, for instance?
Green Transport Package
There was some good news for fleet owners, at least. Mr. Osborne signalled his intention to reward those companies with a fleet of green vehicles by extending the 100 per cent first year capital allowance for low emission business cars to March 2015, whilst also dropping the CO2 eligibility threshold. But is that going to be something of a double-edged sword, with the aforementioned Finance Act running out in 2015? Will that stifle the long-term thinking of business owners, or encourage them to invest in more eco-friendly cars as soon as possible? Would they be better off investing in business contract hire instead?
We cant help but wonder how this Budget will affect MPs
Those are all the main motoring points that were announced by George Osborne yesterday. We’d love to know what you think – do you have a company car and feel that you’re being targeted unfairly? Have you invested in a green car because of the tax breaks on offer, only to have your hat well and truly knocked off with the impending 13 per cent charge? Or are you just the average motorist looking to vent? Whatever you think, leave us a message in the comment box below!