Budget 2015 and how it affects motorists

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George Osborne today set out a number of objectives which will affect motorists, in the Summer Budget 2015

Transport and motoring were covered early on in today’s Summer Budget speech made by George Osborne.

The poor quality of Britain’s roads was first on the agenda for the Chancellor, who said the UK is ranked behind Puerto Rico and Namibia for the quality of its roads network.

The Chancellor said the current system, where many new low carbon emission cars pay no Vehicle Excise Duty (VED), isn’t sustainable and so, from 2017, new VED bands will be introduced for brand new cars only.

“The duty in the first year will be set according to emissions, like today, but updated for new technology,” said Mr Osborne.

“Thereafter there will be three duty bands – zero emission, standard and premium.
“For standard cars – that covers 95% of all cars sold in the UK – the charge will be £140 a year. That’s less than the average £166 that motorists pay today.

“There will be no change to VED for existing cars - no one will pay more in tax than they do today for the car they already own.”

Mr Osborne said “every single penny raised in Vehicle Excise Duty in England” will go into a new Roads Fund he is set to create.

The fund will be used to improve Britain’s roads.

Other key points for motorists concerned MOTs and fuel.

The Government will consult on extending the deadline for new car and motorbike MOTs. They are looking to extend the test from three years to four, which would save motorists over £100m a year, he said.

Plans set out in March to freeze fuel duty were also cemented today.

George Osborne’s speech on motoring in full

“First, transport.

“Four fifths of all journeys in this country are by road, yet we rank behind Puerto Rico and Namibia in the quality of our network.

“In the last 25 years, France has built more than two and a half thousand miles of motorway – and we’ve built just 300.

“In the last Parliament I increased road spending, even in difficult times, and set out a plan for £15bn of new roads for the rest of this decade.

“But we need a long term solution if we’re going to fix Britain’s poor roads.

“Vehicle Excise Duty was used to fund our roads, but not anymore.

“And because so many new cars now fall into the low carbon emission bands, by 2017, over three quarters of new cars will pay no VED at all in the first year.

“This isn’t sustainable and it isn’t fair.

“If you can afford a brand new car, including some of the most expensive models available, you can pay no VED.

“If you can only afford an older, second-hand car, you have to pay more tax.

“So this is what we’ll do.

“From 2017, for brand new cars only, we will introduce new VED bands.

“The duty in the first year will be set according to emissions, like today, but updated for new technology.

“Thereafter there will be three duty bands – zero emission, standard and premium.

“For standard cars – that covers 95% of all cars sold in the UK – the charge will be £140 a year. That’s less than the average £166 that motorists pay today.

“There will be no change to VED for existing cars - no one will pay more in tax than they do today for the car they already own.

“In total we’ll only raise the same amount of revenue from VED in the future that we do today – but that revenue will be secure for the long term.

“And I will return this tax to the use for which it was originally intended.

“I am creating a new Roads Fund.

“From the end of this decade, every single penny raised in Vehicle Excise Duty in England will go into that Fund to pay for the sustained investment our roads so badly need.

“We’ll engage with the Devolved Administrations on how the money is allocated there.

“Tax paid on people’s cars will be used to improve the roads they drive on.

“It is a major reform to improve the infrastructure and productivity of our economy – and deliver a fairer tax system for the motorist.

“We will consult on extending the deadline for new cars and motorbikes to have their first MOT test from three years to four years, which would save motorists over £100m a year.

“I can also confirm that there will be no changes to the plans for fuel duty I set out in March – fuel duty will remain frozen this year.

“Productivity means building more roads, it also means giving people the skills they need to secure a better job.”

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