Spring Budget 2024
As of April 1st 2024, Jeremy Hunt's new budget will spring into action. The changes made will affect car drivers and have put the automotive industry on high alert. As the Chancellor of the Exchequer reshapes the country's economic landscape, the decisions made now will have a lasting impact on the wallets of motorists across the UK. In this blog, we delve into the most significant changes outlined in the budget and how these adjustments will affect car owners and drivers alike. Buckle up as we take you on a detailed journey through the budget that will undoubtedly leave a mark on the road ahead.
Vehicle Excise Duty
Whilst we were expecting a full change to Vehicle Excise Duty (VED) in 2023, the switch to a new system did not happen. VED is a tax, which is payable by all car owners on a yearly basis, dependant on when the car was registered and how much carbon dioxide it emits.
The plan was to switch the rate of tax to a new system based on the number of miles driven rather than a fixed annual amount. Even though this change was expected to benefit those who drive fewer miles, reducing their financial burden, changes did not happen when last year’s budget was announced.
In the Spring 2024 budget, Jeremy Hunt announced that from 1st April VED is set to increase in line with Inflation, which will cost motorists more money annually to tax their cars.
Vehicle Excise Duty will rise in line with inflation of 10.1% compared to April 2023. The amount of tax you pay will depend on your car’s CO2 emissions and the date it was first registered.
New Vehicle Excise Duty from 1st April 2024
For all vehicles registered on or after 1 April 2017, the first-year road tax will now range from £10 to £2,745, a notable increase from the previous £2,605 cap. The standard rate will also see an increment, going up to £190 in 2024-25, from £180 in 2023-24.
Owners of premium cars costing over £40,000 will witness a tax hike, with the new rate set at £390, up from 2023-24's £370.
Cars registered between March 2001 and April 2017 see road tax increase from a range of £20 - £695 to £20 - £735.
Vehicles registered before March 2001 are not spared either, with tax rates now pegged at £210 and £345 for engines 1549cc and below and above 1549cc respectively.
However, there's a silver lining for eco-friendly drivers - fully electric cars are exempted from paying VED until 1 April 2025.
Electric Vehicle Grant Reductions
Last year, the Government grants given to electric vehicle owners dropped significantly.
A year later, there are still increasing calls for help with transitioning customers into electric cars from members of the motor industry.
Recent new cars sales figures have shown that the number of electric vehicle registrations in 2023 has levelled off. This goes against the government’s’ plans to ban the sale of new petrol and diesel cars by 2023.
Even though the transition from ICE to electric power has been delayed by the government, there is still a big push from manufacturers to increase EV sales in the UK
Fuel Duty
Next up, the budget unveiled changes to the fuel duty, which affects all motorists. In a welcome move for drivers, the Chancellor announced that fuel duty would remain frozen for another year, keeping petrol and diesel prices steady at the pump.
Freezing fuel duty is a positive step towards alleviating financial strain for motorists. The 5p cut to fuel duty, which was introduced in 2022 and was due to run out this month, has been extended.
If you’re wondering what fuel duty is, it’s the additional costs on top of the true price of fuel, such as petrol and diesel, this is a form of tax that is then used to help fund the maintenance of the road network.
Fuel duty was last changed in March 2011 and has since remained the same.
HGV Levy Remains Frozen for Another Year!
Great news for the haulage industry! The government has continued its steadfast support in the wake of the pandemic by freezing the HGV levy and VED for the 2024/25 period.
This comes as a relief to operators of heavy goods vehicles weighing over 12 tonnes, who can now enjoy the same rates, reducing cost pressures.
This step originally taken in a bid to tackle driver shortages and aid the industry during difficult times, shows the ongoing commitment to the health and robustness of the UK's haulage sector.
Full Expensing for Leasing Businesses
The government is introducing 'full expensing,' for the newest financial year, enabling companies to claim 100% capital allowances on machinery investments.
This means you can write off the cost of investment in one stroke and earn a hefty tax cut of 25p for each pound you invest. So, whether it's vans, lorries, forklift trucks, or construction equipment like excavators and bulldozers that your business needs, full expensing has got you covered.
While it's still uncertain if car leasing companies would benefit this year, the tax break will undoubtedly extend to vans and trucks leasing firms. The initiative aims to encourage businesses to ramp up their investments, but it's wise to ponder capital allowances and other tax implications before purchasing new machinery.
Cuts to National Insurance
One of the main takeaways from the 2024 Spring Budget is the cuts to National Insurance.
Jeremy Hunt announced that national insurance was cut by another 2p, from 10% to 8%, this is after last years cut from 12% to 10%.
The recent cuts are expected to save the average worker on £35,400 over £900 a year.
In conclusion, the new budget set forth by Jeremy Hunt has several implications for motorists on various fronts, ranging from Vehicle Excise Duty to Fuel Duty. While some of the changes may positively impact car owners and drivers, others may necessitate a shift in driving habits, choices, and overall costs. Ultimately, only time will tell how these budgetary decisions will reshape the future of the automotive market and the lives of motorists in the UK.