As usual there is a lot of hype about the budget and how it may or may not help the UK. But how will today’s news affect us motorists?
GWA take a look at the key points affecting you.
UK motorists will be hit by a small rise in car insurance bills after the Chancellor announced a rise in insurance tax premiums in today’s Budget. The extra costs to insurers will be passed on via higher car insurance premiums, but our fuel bills won’t increase just yet.
Petrol and Diesel duty will remain frozen for the sixth year in a row. Osborne claims to save drivers 18p per litre in comparison to the previous Government. Thanks to low oil prices, pump prices are now at the lowest they’ve been for years.
However, the Chancellor currently takes 74% from the price of Diesel, the highest since 2004. Fuel duty, including petrol totalled £27.4billion in 2015.
‘It’s the tax boost that keeps Britain on the move,’ claimed the Chancellor, saying the move rewarded families and businesses alike who depended on cars for their livelihood.
At a glance motoring developments from the 2016 Budget
Key developments today in Westminster include:
• Fuel duty frozen for sixth year in a row
• Saving typical UK driver £75 a year
• Government claims ’18p a litre lower than under Labour’
• Small business van driver saves £250 annually
• Insurance premium tax to rise by 0.5% to pay for extra flood defences
• 10% of your car insurance premium now goes in tax, up from 9.5%
• Trials of driverless cars approved for 2017
• New £15m connected corridor from London to Dover for autonomous cars
• New tunnel road under Pennines from Sheffield to Manchester
• New petrol price comparison digital boards trialled on M5 near Bristol
• Commitment to expand M62 to four lanes with £161m investment
• £75m upgrades to A66 and A69 northern arteries
• Tolls on the Severn crossing from England to Wales halved by 2018
• £50m Pothole Action Fund for 2016-17
• £130m repair fund for roads/bridges damaged by Storms Desmond and Eva
• Company car tax to continue being based on CO2 beyond 2021
• Businesses encouraged to buy low-emissions cars, with 100% First Year Allowance (FYA) extended for a further three years to April 2021
No major changes to VED or car tax were announced today. It’s worth noting that Britain’s annual tax system for cars will be overhauled in April 2017.
RAC chief engineer David Bizley said motorists will be relieved the Chancellor has not used low fuel prices as an opportunity to raise duty on petrol and diesel to help reduce the deficit. He added: “But, with the Government’s own evidence showing that lower fuel prices are good for the economy, we are disappointed Mr Osborne didn’t make a longer-term commitment to freeze duty beyond next year’s Budget. This would have been the ideal opportunity for the Chancellor to freeze fuel duty for the life of this Parliament and improve his already good record on fuel duty.”
The British Insurance Brokers’ Association (BIBA) said it is astonished the Chancellor decided a further increase in IPT is required to strengthen the nations flood defences and said year-on-year insurance buyers face a tax increase of 66.6 per cent since March 2015. An AA survey said 87 per cent of motorists believe the tax to be unfair and an encouragement to drive without insurance.
Steve White, BIBA CEO, said: “Let’s be clear about this, IPT is a tax collected and remitted by insurers, it is a tax on premiums paid by policyholders motorists, householders, and businesses large and small. Whilst we support the additional spending on flood defences we believe that this could have been funded by the projected £1.5bn annual funds paid to the exchequer as a result in the increase in IPT put in place only last November which puts an increased burden on policyholders many of whom are suffering from ongoing flood damage.”
For advice on your next car get in touch with the GWA team.