Budget summary of the key points that influence how much it costs to run a vehicle in The United Kingdom.
Tax changes and new initiatives
The Budget of March 2017 incorporates a range of measures that affect motorists, Chancellor of the Exchequer Philip Hammond confirmed. Highlights relate to: Vehicle Excise Duty, Fuel Duty, Insurance Premium Tax and Company Car Tax. Further, funding has been assigned to optimise infrastructure and create new technology.
Vehicle Excise Duty
The Vehicle Excise Duty system incorporates a completely new structure for cars registered from April 1st 2017. The structure is:
- first year rates based on carbon emissions (£0 - £2,000),
- standard rates from year 2 (£0 - £140),
- additional rate – on top of the standard rates - for year 2 to 6 inclusive if the vehicle cost £40,000+ when new (£310).
Vehicles, in contrast, registered between March 1st 2001 and March 31st 2017 continue to be taxed via the current, emission only, system. For 2017/2018, prices rise in line with the Retail Price Index that rose 2.6% in the year to January 2017. See table below.
|BAND||CARBON EMISSIONS (G/KM)||PETROL AND DIESEL||ALTERNATIVELY FUELLED|
|A||Up to 100||£0||£0|
|B||101 - 110||£20||£10|
|C||111 – 120||£30||£20|
|D||121 - 130||£115||£105|
|E||131 - 140||£135||£125|
|F||141 - 150||£150||£140|
|G||151 - 165||£190||£180|
|H||166 - 175||£220||£210|
|I||176 - 185||£240||£230|
|J||186 - 200||£280||£270|
|K *||201 - 225||£305||£295|
|L||226 - 255||£520||£510|
* Includes vehicles that emit carbon at a rate higher than 225g/km that were registered prior to March 23rd 2006.
Fuel Duty is frozen for 2017/2018. Rates therefore remain:
- petrol - 57.95 pence-per-litre,
- diesel - 57.95 pence-per-litre,
- biodiesel - 57.95 pence-per-litre,
- bioethanol - 57.95 pence-per-litre,
- liquefied petroleum gas - 31.61 pence per kilogramme,
- natural gas - 24.70 pence per kilogramme.
Insurance Premium Tax
Insurance Premium Tax rises June 1st 2017 from 10%, to 12%. It relates to third party, third party fire theft and fully comprehensive cover. It applies to roadside assistance cover, too.
Company Car Tax
Company Car Tax evolves in the coming years to further encourage motorists – and fleet operators, of course – to choose lower emission, more environmentally friendly, vehicles. See table below.
|Lowest Rate||9% of P11D value (carbon emissions of 0-50 g/km)||13% of P11D value (carbon emissions of 0-50g/km)||16% of P11D value (carbon emissions of 0-50g/km)|
|Highest Rate||37% of P11D value (carbon emissions of 190 g/km+)||37% of P11D value (emissions of 180g/km+)||37% of P11D value (carbon emissions of 165g/km+)|
Note: Add 3% for diesels up to a maximum 37%. Furthermore, from 2020/2021, the system evolves to reward vehicles capable of travelling on electric power only. In this circumstance, there is no pollution whatsoever. As the range increases the taxation falls.
Despite pre-Budget speculation, there is no immediate plan to penalise motorists that have diesels via taxation - or encourage them to swap to less polluting alternatives via (say) a Scrappage Scheme. The Government said it is considering its options, however.
“The Government is committed to improving air quality, and will consult on a detailed draft plan in the spring which will set out how the UK’s air quality goals will be achieved”, it confirmed.
"Alongside this, the Government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017”.
Funding for innovative technology
The Industrial Strategy Challenge Fund enables businesses and scientists to collaborate on a wide range of projects. The £270 million initial investment, for 2017/2018, will “kick-start the development of disruptive technologies” - such as fully autonomous vehicles - “which have the potential to transform the UK economy”.
Further challenges include: “Leading the world in the development, design, and manufacture of batteries that will power the next generation of electric vehicles (which help) tackle air pollution”.
The National Productivity Investment Fund makes £690 million available for Local Authorities to improve infrastructure, and cut congestion. Money is to be “competitively allocated” based on merit. Further, The North receives £90 million – and The Midlands £23 million - to improve problematic parts of the national network.