The 2011 budget was announced today by Chancellor George Osborne and it contained changes that will affect both private and company motorists.
Firstly, in an effort to encourage business to use ultra low carbon cars, the Government will freeze company car tax for car emitting less than 95g/km from April 2013, which will include cars like the new Kia Rio, Toyota's Prius and the Lexus CT200h. These will be the only cars that then qualify for the 10% company car tax band for petrol cars, or 13% for diesels.
All the other BIK bands, for cars emitting more than 95g/km, will be increased by 1% from the same date.
Company car AMAP - Authorised Mileage Allowance Payment - when you use your own car, has increased from 40p to 45p a mile, for the first 10,000 miles and 25p a mile thereafter. An allowance of 5p a mile will now also be extended to passengers using cars for company business.
AFR - the Advisory Fuel Rate - when you use your company car for business, still depends on the size of the engine, and type of fuel, and is expected to remain at the same rates as before.
Lastly, for company car drivers, the fuel benefit charge will increase from £18,000 to £18,800 from April 6, 2011.
It was also announced that fuel duty would be cut by 1p a litre. The April-only inflation increase, which would have seen prices rise by 5p a litre, will also be delayed to January 2012, while the April 2012 planned duty increase of 1p a litre will be delayed until August 2012.
The current fuel duty escalator system will be replaced with a fair fuel stabiliser that increases tax on North Sea oil production when oil prices are high and decreases it when oil price are low meaning that when the oil companies have high profits the Goverment will receive more money and when profits are falling the Government will take a smaller cut.
As an added potential benefit the Government will invest £100 million to repair potholes and damage caused by the cold winter in addition to the £100 million already announced in February 2011.
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