Chancellor George Osborne confirmed in the 2013 Budget that a planned fuel price rise will no longer take place in September.
'I am cancelling this September's fuel duty increase altogether,' said Osborne. 'Fuel is now 13p cheaper than it would have been,' he claimed.
This means that the cost of refuelling the UK's best selling car the Ford Focus remains the same. According to Petrolprices.com, a litre of petrol currently costs 133.7p, while diesel costs 144.7p, which means it will cost 75.76 to refuel a Focus 1.0-litre Ecoboost, while the Focus 1.6-litre diesel will cost 76.60.
Edmund King, AA president, welcomed the announcement saying: 'A September fuel duty hike would have been the last straw likely to break UK drivers' budgets. The freeze is a pragmatic move and will bring some relief at the pumps.'
The chancellor also announced that two new company car tax bands will be introduced. The first will be from 0-50g/km and the second will be 51-75g/km. Currently all cars that emit 0-75g/km are covered by the same bracket and are subject to 5% company car tax.
Owners of cars emitting between 0-50g/km will pay 5% company car tax in 2015-16, and 7% in 2016-17. Drivers with cars in the 51-75g/km bracket will pay 9% in 2015-16 and 11% in 2016-17.
In the future, the Government intends to close the gap between the two bands and the 76-94g/km band, from three percentage points in 2017-18 to two percentage points in 2018-19 and 2019-20.
The Society of Motor Manufacturers and Traders (SMMT) has welcomed the reform, with head of communications Keith Lewis saying: 'This is exactly what we have been calling for. We wanted a greater differentiation between low-emission vehicles and we are delighted with it.
'It was quite a broad brush approach before and anything that encourages people into low-emission vehicles is going to be good.'
Owners of classic cars received a boost in the Budget. Classic car tax exemption has been moved forward by a year, so cars built before January 1, 1974, will now qualify for a free VED disc. Previously this applied only to cars built before January 1, 1973.
Motorists wanting to declare their car as being off the road will no longer have to do so on an annual basis, because SORN declarations are now open ended.
However not only does the road fund licence pricing system remain unchanged, but the Government has no plans for significant reforms to VED in this parliament.
Lewis also welcomed this announcement, saying: 'There is a real suggestion that people are using VED as a guide to buying a car so it is good that they are not going consider a significant reform of the system.'