Pre-Budget Report: at a glance

* No early increase in fuel duty * VAT increase will push up costs * Good news for 'green' company car drivers...

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What Car? Staff
9 Dec 2009 15:20 | Last updated: 14 Jun 2018 00:03

Despite fears of a hike in fuel duty, the Pre-Budget Report (PBR) has left motorists relatively unscathed.

The Chancellor of the Exchequer Alistair Darling confirmed that the 1p-a-litre rise in fuel duty would not be brought forward, and would come into effect as planned in April.

VAT rise signals bumpy ride for drivers
The increase in VAT on January 1 won't be such good news, though. Based on current prices, the increase in VAT from 15% to 17.5% will add:
• 2.36p to a litre of unleaded (from 108.9p to 111.26p)
• 2.4p to a litre of diesel (from 110.17 to 112.57p).

The hike in VAT will add around 60 to the annual fuel bill of a two-car family.

Electric cars get tax holiday
The green car industry received a welcome boost, with Alistair Darling's announcement that electric cars would be exempt from company car tax for five years.

However, the immediate advantage of this for the business sector will be limited due to shortage of suitable and affordable vehicles.

Edmund King, the AA President, said: 'We welcome plans to exempt electric vehicles from company car tax for five years. However, most sales reps would struggle getting up and down the M1 in the current range of EVs available.

'Hopefully this will encourage motor manufacturers to bring an iconic electric vehicle to market as soon as possible. The AA hopes that a good, affordable, stylish, well-performing, safe, longer-range family electric car will come to market in the next few years.'

'Showroom' tax confirmed
The Chancellor also confirmed that there would be a new first-year 'showroom' tax for new cars.

Below is the VED rates for new cars bought in 2010-11 - the so-called 'showroom tax' that comes into effect in April 2010. These are the rates you will pay in the first year of ownership.

In the second year VED road tax rates will revert to the regular rate for that vehicle.

First-year VED rates in 2010-11
Band A (up to 100g/km CO2)   no fee
Band B (101-110g/km CO2)   no fee
Band C (111-120g/km CO2)   no fee
Band D (121-130g/km CO2)   no fee
Band E (131-140g/km CO2)   110
Band F (141- 150g/km CO2)  125
Band G (151 to 165g/km CO2)   155
Band H (166 to 175g/km CO2)   250
Band I (176 to 185g/km CO2)   300
Band J (186 to 200g/km CO2)   425
Band K (201 to 225g/km CO2)   550
Band L (226 to 255g/km CO2)   750
Band M (Over 255g/km CO2)   950