Budget preview: How it could affect you

  • Darling's first Budget on Wednesday
  • Fuel increases expected
  • High CO2 emitting cars may be penalised
Chancellor Alistair Darling will unveil his first Budget on Wednesday.

We'll bring you the low-down as be delivers his report to Parliament but, in the meantime, we take a look at the likely tax measures to affect motorists and car buyers.

Fuel duty
Fuel is expected to go up by 2p a litre on April 1. This was announced last year, and in the run-up to this Budget there had been many calls for the duty increase to be scrapped or frozen, but Darling's first Budget is being touted as the Government's 'greenest' yet, so it's unlikely he will heed these calls.

Biofuels
The Chancellor is to encourage greater use of biofuels by forcing oil companies to double the amount of biofuel they put into their fuels.

VED
The Chancellor is expected to increase the number of VED bands. There are currently seven bands, with cars in the lowest Band A exempt from paying road tax. Under the new system, drivers of cars in the lower bands will pay less tax than they do currently.

Excise duties solely on the first year of ownership of cars in the highest band may also be increased.

Showroom tax
In a further bid to encourage car buyers to opt for greener cars, the Chancellor may introduce a 'showroom' tax on the most-polluting cars. Some newspapers estimated this could increase the cost of one of these cars by as much as £2000.

The Observer newspaper also reported that tax discs could be colour coded so that, for example, parking charges could be levied at high-CO2-emitting cars.

These measures are expected to be delayed for a year and are thought not to be retrospective – ie they are designed to encourage car buyers make greener choices for their next car.

That's the speculation. Come back on Wednesday for the facts.

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