Budget 2014: changes that affect car drivers

  • Fuel duty hike planned for September 2014 is cancelled
  • Road tax rates to go up by rate of inflation (RPI)
  • More money for pot-hole repairs and classic car VED exemption

The 2014 Budget revealed that the fuel duty hike for September 2014 will not go ahead.

The cancellation of the 2p a litre rise will be welcome given the continuing high cost of fuel with the average price of a litre of unleaded around £1.30.

It was a confirmation of the announcement made by the chancellor in his autumn statement and could help cash-strapped motorists.

Road tax charges increase

There were no major changes to the standard road tax bands or charges. The Budget announced that the VED rates for 2014/15 would increase in line with the Retail Prices Index (RPI).

Given that inflation is running at just over 2% then there isn’t a huge jump in charges on most car tax bands.

For example tax band D currently costs £105 and from April 1st this year that moves up to £110, and this applies to cars that emit between 121-130g/km of CO2. There are 13 road tax bands in total from A (emissions of 100g/km of CO2 or lower) through to band M (emissions of 255g/km or higher).

For all the road tax bands and the new charges for 2104/15 click here.

First year rates are also subject to the same percentage rise so again not all rates rise especially as the zero rate still applies to Bands A-D. This is to encourage more people to buy lower emitting cars to help reduce air pollution and help prevent global warming.

To view the new first year rates for 2014/15 click here.

The plans for a paperless tax disc system has also been confirmed along with a new payment system that allows car owners to pay the annual road tax charge via direct debit on a monthly basis.

The move that is due to come in to force in October this year means that there will be no need to display the iconic road tax disc in the windscreen of your car. Those choosing to set up a monthly payment are likely to incur an extra 5% charge over the yearly rate though.

The 2014 Budget also revealed that there would be more cash for pot hole repairs with some £200 million to help tackle the UK’s pock-marked tarmac and classic cars exempt from VED will now be on a rolling 40-year exemption starting from 1st April 2014. So that would put cars register before April 1st 1974 will not have to pay road tax and that moves forward a year every April 1st.