Added: 05 December 2017

The Chancellor made a number of announcements in the Budget last month that will affect motorists.

  • Fuel duty – the scheduled rise in fuel duty from April 2018 was cancelled.  It is the eighth consecutive year that there has been no increase.

  • Vehicle Excise Duty – from 1 April, 2018, VED rates for cars registered before April 2017 and the First Year Rates for cars registered after April 2017 will increase in line with the Retail Price Index.

  • Air quality – in line with the National Air Quality Plan published in July, the Government will provide £220 million for a new Clean Air Fund.  It will allow local authorities in England with the most challenging pollution problems to help individuals and businesses adapt as measures to improve air quality are implemented. 

  • VED on diesel cars – the Clean Air Fund will be paid for by a VED supplement on new diesel cars first registered from 1 April, 2018, so that their First Year Rate will be calculated as if they were in the VED band above (it will not apply to next-generation clean diesels certified as meeting the new Real Driving Emissions Step 2 standards); and a rise in the existing company car tax diesel supplement from 3% to 4%, with effect from 6 April, 2018 (this will also apply only to diesel cars which do not meet the RDE2 standards).

  • Company car tax and VED – carbon dioxide figures compatible with the current New European Driving Cycle test procedure will be used by HM Revenue & Customs for company car tax until April 2020.  The Government will then change to the Worldwide Harmonised Light Vehicle Test Procedure.  Similar legislation will be introduced for VED.

The Government has also said it will make “several changes” to the taxation of employee expenses in future.  These include HM Revenue & Customs working with external stakeholders to improve the guidance on travel and subsistence and the process for claiming tax relief on non-reimbursed employment expenses.

  • Ultra-low emission vehicles – to support the transition to zero emission vehicles, the Government will regulate to support the wider roll-out of charging infrastructure, invest £200 million (to be matched by private investment) into a new £400 million Charging Investment Infrastructure Fund, and provide £100 million to guarantee continuation of the Plug-In Grant to 2020 to help with the cost of purchasing a new electric vehicle.

  • Connected and Autonomous Vehicles – the Government wants to see fully self-driving cars, without a human operator, on UK roads by 2021.  It will therefore make changes to the regulatory framework, such as setting out how driverless cars can be tested without a human safety operator.  The National Infrastructure Commission will also launch a new innovation prize to determine how future roadbuilding should adapt to support self-driving cars.

  • Transforming Cities fund – a £1.7 billion fund will support intra-city transport by targeting projects which drive productivity by improving connectivity, reducing congestion and utilising new mobility services and technology.