How the budget affects you

  • How will the latest Budget affect you and your car
  • Government set to tax owners of high polluting cars 
  • Road tax system set to be changed

Our guide explains all about the Budget 2008. Some owners' pockets will be hit harder than others, with thirsty 4x4s, luxury cars and some sports cars hit hard. Drivers of greener cars are no worse off. 

Here's everything you need to know about the Budget 2008.

What are the changes?

Expected fuel duty rise of 2p per litre, announced autumn 2007 and due to take effect in April, will be postponed until October 2008.

Owners of cars in road tax band G (with carbon dioxide emissions at 226g/km or higher and registered from March 23, 2006) suffer a £100 in road tax as announced in the pre-Budget report last autumn. Bands C to F (121-225g/km) increase by £5. No change for bands A and B (0-120g/km).

2009 reform of Vehicle Excise Duty to encourage drivers to choose cleaner cars. Owners of small cars and compact family cars are likely to pay less road tax in future with a 150g/km threshold, while more cars will be exempt from road tax during their first year on the road. High polluting vehicles will pay double in their first year after registration.

New trials are planned with a view to introducing road charging in future.


How is road tax calculated?

Since 1st March 2001, annual road tax (or Vehicle Excise Duty - VED) rates have been determined by cars’ CO2 emissions and the type of fuel that they use. This information is on the car’s log book - also called a V5 document. If your car was registered before the 1st March 2001, then car tax is based only on the engine size, with one rate for engine sizes up to and including 1549cc and one for engines over 1549cc.



Find numbers taxing?

We can tell you how much you have to pay with our road tax calculator. It's free, quick and easy to use. Just tell us what make, model and derivative your car is and we'll tell you how much your car tax, or road fund licence, will cost.