In a highly anticipated move, Chancellor of the Exchequer, Jeremy Hunt, recently unveiled the 2024 Budget, offering a mixed bag of announcements that could significantly impact motorists across the nation.
While much attention was drawn to anticipated cuts in National Insurance and alterations to child benefit thresholds, motorists were also keen to understand the implications of the budget on their wallets and wheels.
Fuel duty freeze extended
One of the most welcomed announcements for motorists came with the news that the freeze on fuel duty would persist.
Since 2011, no Chancellor has dared to increase fuel duty, and this budget continues that trend.
Additionally, the temporary 5p per litre cut in fuel duty, initially introduced in March 2022 and due to expire imminently, will be extended for another 12 months.
This move maintains the long-standing rate of fuel duty at 52.95p per litre, offering respite for owners of petrol, diesel, and hybrid vehicles.
With the average UK fuel prices currently at 144.6p per litre for petrol and 154.2p per litre for diesel, the government estimates that extending the freeze will save the average motorist £50 in the upcoming fiscal year.
RAC Head of Policy, Simon Williams, noted that with a general election looming, it was hardly surprising that the Chancellor refrained from tampering with fuel duty, effectively passing the decision to the next government.
Car tax adjustments
While there were no specific alterations to car tax rates, the previously announced increase in line with the Retail Price Index will come into effect from April 1st, 2024.
This means that road tax rates will escalate for almost all vehicle owners.
The standard car tax rate for 12 months, currently £180, is expected to rise to £190, with a similar adjustment for alternative fuel cars, increasing from £170 to £180, for vehicles registered from April 1st, 2017.
Electric vehicles facing changes
In a significant move aimed at promoting fairness in taxation amidst the growing popularity of electric vehicles (EVs), the Government announced that from 2025, EVs will no longer be exempt from car tax.
This applies to electric cars, vans, and motorcycles, aligning with the Government’s goal to ensure equitable tax contributions as the adoption of EVs accelerates.
However, concerns have been raised regarding the lack of incentives for electric car buyers.
Organizations such as the AA have advocated for the reintroduction of incentives, while the Society of Motor Manufacturers and Traders (SMMT) proposed halving the VAT charged on new EVs from 20% to 10% for three years to stimulate sales.
Additionally, there has been criticism of the current VAT structure for public EV charging, which charges a higher rate compared to home charging, penalizing those without driveways.
Despite these challenges, the Government has yet to address these issues comprehensively.
The SMMT expressed disappointment, labeling it a missed opportunity to energize the market and facilitate a smoother transition to electric vehicles.
As the budget measures take effect, motorists and industry stakeholders will closely monitor their impact on the road ahead, particularly as the automotive landscape continues to evolve amidst shifting priorities towards sustainability and efficiency.
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