Budget 2021: What does it mean for motorists?

Following Chancellor Rishi Sunak's budget, we look at whether it was good or bad news for drivers and car buyers...

Mini petrol station

The Government has announced a freeze in fuel duty as part of its annual March budget.

Speaking in the House of Commons, Chancellor Rishi Sunak said he would continue to do “whatever it takes” to help the country recover from the coronavirus pandemic.

Fuel duty has been frozen at 57.95p per litre for the coming year, a rate that has been in place since 2009. The Government said the average driver had saved £1600 in fuel costs over the past 11 years thanks to the freeze.

Responding to the news, the RAC’s head of policy Nicholas Lyes said drivers could “breathe a sigh of relief”, adding: “We feared this [the planned rise] would only pile further misery on drivers at a time when pump prices are on the rise and many household incomes are being squeezed as a result of the pandemic.”

Meanwhile, campaigning group FairFuelUK said “motorists, van drivers and truckers across the UK will be pleased at this protracted decision from the Chancellor. They will hope this is just the start of more pro-motoring policies, which have been sadly lacking in this Parliament”.

There was no change to the road tax (VED) system for cars, with the annual cost of the tax rising in line with the Retail Price Index from April 2021. To support the haulage sector and pandemic recovery efforts, the Government has decided to freeze HGV VED for 2021-22 and will suspend the HGV Levy, a fee for larger lorries, for another 12 months from August 2021.

Benefit in kind (BIK) taxes for company cars will continue to rise in line with the Consumer Price Index as in previous years. This means the rate for pure electric vehicles rises from zero to 1% and the rates for cars with higher emissions also increase by 1%. 

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