In his first budget of the new Conservative government, Chancellor George Osborne says new tax bands will be created from 2017
Chancellor George Osborne has pledged to “improve life for the motorist” with a new vehicle tax system that will come into force from April 2017.
Delivering his first budget of the new government, and the first budget of a Conservative government since 1996, Osborne said a new Vehicle Excise Duty tax system would be designed to take into account the increase in the numbers of low-emission vehicles on UK roads.
Addressing Parliament, Osborne said the current VED system “isn’t sustainable or fair” given the rise in low-emission vehicle ownership, which sees increasing numbers of people paying no VED at all during their first year of ownership.
The new system means that the first year of vehicle tax will be based on a revised series of emissions bands. Thereafter, the rate of tax will be calculated by a new series of bands designed to distinguish between low-emission, standard and ‘premium’ vehicles.
Though the actual prices in those new bands have yet to be set, the average cost of annual vehicle tax is set to be around £140.
Cars with a list price of over £40,000 will also pay an additional £310 for the first five years.
The budget statement makes clear that the system will be reviewed as necessary to make sure the cleanest vehicles are incentivised.
The money raised from VED will be set aside for a newly created roads fund, which will be put into action at the end of this decade to pay for the upkeep and improvement of Britain’s roads. Osborne said the new fund was designed to create “the sustained investment for the roads we so badly need.
“This is a major reform to improve the productivity of our economy and improve life for the motorist."
Osborne said four fifths of journeys in the UK are now taken by road, and yet the UK has built just 300 miles of motorways in the past 25 years.
The Chancellor has also kept the promises he made during last year’s autumn budget, reiterating that fuel duty would remain frozen for this year.
Describing his budget as a "budget for working people", Oborne said: “Our long-term economic plan is working, but the greatest mistake this country could make is to think that all our problems are solved.
"This is a big budget for a country with big ambitions."
Get the latest car news, reviews and galleries from Autocar direct to your inbox every week. Enter your email address below:
from Autocar RSS Feed http://ift.tt/1HfYrQz
via AGYA
