Chancellor George Osborne’s Budget speech will take place on March 20 and, as ever, the UK’s many millions of licence holders will be holding their breath to see how the 2013 scheme affects the cost of owning and running a car.
Early indications are that there won’t be any particularly radical changes in this year’s announcement, however.
Fuel duty
There is pressure on the Government to ease the cost of living in this year’s Budget and fuel duty is an integral part of that. Prime Minister David Cameron has been quoted as saying both he and George Osborne will do ‘everything we can’ to make life easier for car owners.
With the cost of fuel currently riding high, it seems likely that a rise in fuel duty planned for September will be scrapped or at least delayed.
Several MPs have put pressure on the Chancellor to scrap the fuel duty rise planned for the Autumn, as have groups such as the Freight Transport Association (FTA). The FTA argues that current fuel prices are placing too much financial pressure on British freight operators and has suggested a reduction in road fuel duty by three pence per litre and similar reductions in gas oil duty.
It has also suggested that fuel duty rates for natural gas and biomethane should be fixed relative to diesel rates for a minimum of 10 years, to encourage the uptake of more environmentally friendly vehicles.
Every scheduled fuel duty rise so far since 2010 has been scrapped or frozen by the coalition and it seems likely that this will again be the case this month.
Another delay, rather than a cut, in fuel duty increase could well be the order of the day, but the announcement is likely to give us a clearer picture of what will happen next with fuel prices over the medium term at least.
The next fuel duty increase may well be saved for when the price of petrol itself begins to fall. Since fuel prices are comparatively high at the moment in general, the Government is already gaining a fairly sizeable amount of revenue from VAT on fuel and so may be able to hold off on a rise on duty in the short term.
Road tax
In last year’s budget Vehicle Excise Duty (VED) rose with the cost of inflation, meaning an increase of £5 to £15 depending on the type of car.
Currently, cars with CO2 emissions lower than 130g/km don’t need to pay any road tax for their first year on the road. Cars with emissions below the 100g/km mark go one better and don’t need to pay any road tax full stop.
With cars in general becoming more fuel efficient, it’s possible that these boundaries may be adjusted a little as will be the case for company car drivers’ BIK band system from April 1 2013.
The basic pattern will remain the same, though: the cleaner your car is, the less you’ll pay in annual road tax. To help work out how much you’ll be paying following the budget you can always use the Parkers car tax calculator.
Road pricing
The notion of a road pricing scheme continues to be discussed in Whitehall, with plans mooted to establish a scheme where specific firms build and maintain motorways. This could potentially lead to a system where drivers pay a motorway licence fee. This is some way off, however, and we’re unlikely to hear much about it in this year’s Budget.
The UK economy has not experienced growth over the last year and the likely outcome of this year’s Budget is a minimal set of changes to help keep people spending, whether they own a car or not.
