Budget cuts bills for drivers

November 24, 2008 | By | In Statistics

Cuts in VAT reduce new-car prices and garage bills, while major road tax rises are delayed for a year.

Chancellor Alistair Darling’s pre-Budget report brought three pieces of good news for hard-pressed drivers.

First, an immediate reduction in Value Added Tax (VAT) from 17.5% to 15% means buying a new car, servicing and repairs will become cheaper – saving £2.50 on a £100 bill, or £300 on a £12,000 car. And because garages usually add VAT as a separate element of a bill, the reduction will be immediate and easy to see.

However, if you use a one-man garage to service your car, he may not earn enough to be VAT-registered – so the bill won’t change.

Second, pump prices for diesel and petrol should fall by 2-3p per litre. And with prices for unleaded already dipping below 90p as lower wholesale prices for oil feed through to forecourts, retail prices could slip as low as 95p/litre for unleaded and 99p for diesel. However, Mr Darling is also planning to introduce a 2p per litre increase in fuel duty, which will cancel out VAT savings.

Finally, changes to the road tax system which could see drivers of thirsty, polluting cars paying well over £400 a year are now to be postponed – for at least a year. Instead, you’re likely to pay only a £5 increase on what you do now, until 2010.

Social media & sharing icons powered by UltimatelySocial

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close