NGC Budget 2018 report on motoring

Budget 2018 is one of the lightest-touch budgets for UK motorists for some time and makes no significant changes to transport taxation. What motoring-related announcements were made by the Chancellor Philip Hammond are as follows:

Fuel DutyFROZEN – Philip Hammond announced earlier in October that the main fuel duty rates for petrol and diesel will continue to be frozen for the 2019-20 financial year, cancelling the planned increase. This means that fuel duty will have been frozen for a ninth year in a row, the longest fuel duty freeze for more than 40 years. Fuel duty therefore remains at 57.95 pence per litre until further notice.

Vehicle Excise Duty (VED) for carsNO CHANGE – After two years of regulation changes, VED rules remain broadly the same. From 1 April 2019 VED rates for cars, vans and motorcycles will increase in line with RPI (inflation adjustment). Zero-emission models remain exempt from VED, other than the Premium Rate for models costing more than £40,000. First Year Rates continue to be purely emissions based, with these included in a model's OTR price.

Vehicle Excise Duty (VED) for vans/HGVsNO CHANGE – For vans, the government will shortly publish a summary of responses from the consultation on VED reform for vans, published in May 2018. The response will set out proposals to introduce environmental incentives from April 2021. Bands and rates will be set out ahead of Finance Bill 2019-20. To support the haulage sector, the government will freeze the Heavy Goods Vehicle VED for 2019-20.

Company Car TaxNO CHANGE – Changes announced in last year's budget remain, despite campaigns for BIK rates for electric vehicles to be frozen or reduced for 2019/20. From 06 April 2019 fuel benefit charges will increase in line with RPI and the van benefit charge will increase in line with CPI.

Plug-in Car Grant (PiCG)REDUCED – As updated on 21st October, the Plug-in Car Grant has been reduced removing funding for Category 2 & 3 models (typically PHEVs) and reducing the grant from £4,500 to £3,500 for Category 1 models (typically pure-EVs).

Enhanced Capital Allowances (ECAs) – The government will extend the ECA for companies investing in electric vehicle charge points to 31 March 2023. This will help achieve the government’s ambition for the UK to become a world-leader in the ultra-low emission vehicle market.

Alternative fuels – Following review, the government will maintain the difference between alternative and main road fuel duty rates until 2032 to support the de-carbonisation of the UK transport sector, subject to review in 2024.

Introduction of the Worldwide harmonised Light vehicles Test Procedure (WLTP) – The government will review the impact of WLTP on Vehicle Excise Duty (VED) and company car tax (CCT) to report in the spring. WLTP aims to provide a closer representation of ‘real-world’ fuel consumption and CO2 emissions.

Find out more about car tax (VED)

Find out more about company car tax (BIK)

Find out more about electric vehicles

Chris Lilly

Author:Chris Lilly
Date Updated:29th Oct 2018

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