Pre-budget report 2009 motoring round-up
VAT
As we know VAT will return to 17.5% as from 01 January 2010 and this will obviously impact on buyers of new (and some used) cars from the start of next year.
Fuel Duty
As already announced by the Chancellor in his 2009 Budget, fuel duty will continue to rise by 1p a litre above inflation each year from 2010 to 2013.
Vehicle Excise Duty
The Chancellor confirmed that changes to VED’s ‘standard’ rates in 2009/10 will take place on 1 April 2010 with the additional introduction of differential ‘first-year’ rates for new cars (otherwise known as the “showroom tax” and payable during the first year of ownership).
In April 2010, the standard rate will be increased by around £15 and the discounted rate will be frozen. VED rates for cars and light goods vehicles registered before March 1, 2001 will increase in 2010 – the higher rate (dependent on engine size) will increase by £15 and the lower rate will be frozen.
Company Car Tax
Company car tax was reformed in 2002 and is now based on carbon emissions. In the 2009 Budget 2009 it was announced that there would be a number of reforms to respond to rapidly “advancing vehicle technologies”, as well as to support the public finances. This included indicating that, in 2012, the Government intends to remove the 10% category for cars emitting 120g of CO2 per km or less, and instead extend the system of bands so that they increase by 1% with every 5g CO2 per km increase in emissions, from 10%.
The Government also confirmed that from April 2012 the 10% rate will apply to cars that emit 99g or less CO2 per km. This will ensure that, as EU targets come into force, bands continue to reflect advances in fuel efficiency. To “support the public finances and encourage more fuel-efficient travel”, from 6 April 2010, the multiplier will increase from £16,900 to £18,000.
As we reported earlier this week, the Chancellor announced that, from April 2010, Electric Vehicles will also be exempt from company car tax for five years so as to further encourage the purchase of electric vehicles by business. This will benefit both the companies that provide a company car, and the employees who drive them.
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According to recent research used car buyers are most likely to buy a blue or black 5 door hatchback which is 3 years or older. Does that sound like you? 
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