21.3.2012 Follow Budget 2012 with Next Green Car

Follow Budget 2012 today with Next Green Car as the Chancellor announces future levels of fuel duty and company car tax rates.

As the Chancellor George Osborne aims to protect and stimulate the economy, Next Green Car is following the Budget live, providing clear analysis of all tax issues affecting road transport.

Next Green Car coverage of Budget 2012 on Wed 21st March.

Fuel duty – The Chancellor confirms the fuel stabiliser mechanism (see below) and previous announcements regarding fuel duty, namely: the deferral of the 3.02 pence rise in fuel duty until August 2012 (from January 2012), and the cancellation of the inflation increase originally due for August 2012. With fuel duty and pump prices being so crucial to many households and businesses, the Chancellor was obviously keen not to place any more weight on motorists.

'Fair' fuel duty stabiliser – Introduced in 2011 to control fuel costs (as far as is possible) by avoiding automatic increases in fuel duty as long as oil prices remain high. Revenues lost by the introduction of the stabiliser are balanced by increasing tax on North Sea oil revenues. Any increase in fuel duty is only permitted when, and if, oil prices fall.

Vehicle excise duty (VED or 'road tax') – New annual VED rates will only increase to account for inflation; for an average car, this will mean around £5 increase per year. However, the differential between the lowest and highest emission cars will increase slightly.

Future VED reform – The Government is to consider whether to reform VED over the medium term to ensure that all motorists continue to make a fair contribution to the sustainability of the public finances, and to reflect continuing improvements in vehicle fuel efficiency. In addition, the Government aims to develop a direct debit system to allow motorists to spread their VED payments. The Government will seek the views of motoring groups on these measures.

Enhanced capital allowances – The Chancellor announces that the CO2 threshold for ECA on the lowest emission cars will decrease. Our guess is that is will change from the current threshold of 110 g/km to 100 g/km (will update later when we see the full Statement).

Car fuel benefit charge (FBC) 2012–13 and 2013–14 – From 6 April 2012, the FBC multiplier for cars will increase from £18,800 to £20,200, and will increase by 2% above the RPI in 2013-14. The Government commits to pre-announcing the FBC multiplier one year ahead.

Van fuel benefit charge (FBC) 2012–13 and 2013–14 – From 6 April 2012, the van FBC multiplier will be frozen at £550, and will increase by the RPI in 2013–14. The Government commits to pre-announcing the FBC multiplier one year ahead.

Company car tax rates 2014–16 – The appropriate percentage of list price subject to tax will increase by one percentage point for cars emitting more than 75 g/km of carbon dioxide, to a maximum of 35% in 2014–15, and by two percentage points, to a maximum of 37% in both 2015–16 and 2016–17.

Company car tax for electric and ultra-low emission cars – From April 2015, the five-year exemption for zero carbon and ultra low carbon emission vehicles will come to an end as legislated in Finance Act 2010. The appropriate percentage for zero emission and low carbon vehicles will be 13% from April 2015 and will increase by two percentage points in 2016–17.

Company car tax change for diesels – From April 2016, the Government will remove the three percentage point diesel supplement differential so that diesel cars will be subject to the same level of tax as petrol cars.

Van benefit charge – The Government will freeze the van benefit charge at £3,000 in 2012–13. From April 2015, the five year exemption for zero carbon vans from the van benefit charge will expire, as legislated in Finance Act 2010.

Rail network – Not quite our focus, but the rail network in the North-West of England is to gain from significant new investment and is likely to include electrification of many NW routes.

For the latest car and fuel tax costs, go to: Car tax and fuel duty »
For the latest company car tax rates, go to: Company car tax rates »