How the Budget Will Hit Drivers
How the Budget Will Hit Drivers
It was hardly unexpected, but Alistair Darling’s first budget has specifically targeted drivers, especially those of large and high-emitting vehicles. It has been estimated that nine in ten cars will face higher taxation levels, with popular family cars such as the Nissan Micra being hit the hardest. The move is designed to persuade people to drive more environmentally-friendly cars, with the policy being implemented in the key areas discussed below. Those seeking a detailed breakdown of the 2008 budget can find on the HM Treasury website.
Road Tax: The amount of Vehicle Excise Duty paid by any given driver will, by 2010, depend on the efficiency of their vehicle. Owners of cars whose emissions exceed 255g/km of carbon dioxide will be forced to pay £950 for their first year of owning the car and then £455 for every year they own it after that. Drivers of more environmentally-friendly cars will face no such charge for their first year of ownership, and only a tax of between £20 and £95 annually after that. The Chancellor has also narrowed the tax bands, meaning there is less chance of cars with varying emissions attracting the same level of taxation. Two bands will even be added to the scale, at the top, hitting drivers of the cars with the highest carbon emissions. Previously, drivers of heavily emitting sports cars were paying the same as those of certain family cars which, though bad, were by no means as bad as those with which they shared a tax band.
Alternative fuels: In the same year, the rebate for biofuels will be halted. This will lead to an increase in prices for drivers who buy of biofuels such as bioethanol E85. It is hoped that this will only be temporary, as the government plans for its Renewable Transport Fuel Obligation to provide the incentives for biofuels in the future. Liquefied petroleum gas will see a one pence reduction in its duty, with another alternative, compressed natural gas, retaining its favourable duty until 2010. Meanwhile, an increased in the main road fuel duty has been postponed. This is only a temporary reprieve for drivers, however, as the increase will take effect in October. The delay is due to the current increase in petrol and diesel prices which has resulted from the recent increase in the price of crude oil.
All in all, research has demonstrated that the chances are high that most drivers will be affected at least in a small way by Darling’s budget, with family cars facing greater tax increases than sport cars such as the Rolls-Royce Phantom. As is the government’s intention, drivers seeking to avoid these increases will need to purchase and start driving a vehicle with lower emissions.
If you’ve bought a new car, low-emitting or not, take a look at ASDA Finance if you’re looking to save money by changing your car insurance provider. Co-operative Insurance also has a good reputation for supplying low priced car insurance quotes.
