As expected, motorists are to be hit hard by the 2008 Budget. Chancellor Alistair Darling announced his plans for the British economy this afternoon. Changes include:
1. From April 2010, no car tax in the first year for cars that emit less than 130g/km of CO2. A so-called “Showroom Tax” means that the most polluting vehicles such as those in Band G will pay £1000 road tax in their first year, before dropping to the current level of £400.
2. From April 2009, Vehicle Excise Duty is to be reformed to encourage manufacturers to produce more environmentally friendly vehicle.
3. New funding will be set aside to develop technology for national road pricing in a bid to ease congestion.
4. The 2p rise in fuel duty will be postponed from April to October. The short-lived reprieve follows record highs in crude oil prices.
5. New capital gains tax will come in next month.
6. Tax incentives may be introduced to encourage companies to adopt greener fleets.
7. Different coloured tax discs on cars could be introduced to allow higher parking charges for the most polluting vehicles.
8. The current disallowance for leased cars costing over £12,000 will be replaced by a disallowance based on CO2 emissions.
From April 2009, cars with CO2 emissions in excess of 160g/km will attract a 15% net disallowance relating to finance payments. For cars with emissions of 160g/km or below there will be no disallowance.
9. Writing down allowances (WDAs) will be based on emissions from April 2009. Cars with CO2 emissions above 160 g/km will attract 10% WDA, whilst cars with emissions of 160g/km and below will attract 20% WDA.
10. The duty differentials given to biofuels will be abolished in 2010.
11. The 100% first year allowance for the cleanest vehicles is being extended to March 2013. The qualifying CO2 emissions threshold will be reduced to 110g/km.
12. No changes to Approved Mileage Allowance Payments (AMAPs) for now. Although the base band for company cars will be reduced from 135g/km to 130g/km by 2010.
13. Although nothing was announced, Van Fuel Benefit is expected to be based on CO2 emissions much like company cars.