• March 16, 2020

  • Abby Nuttall

  • Articles

Last week Chancellor Rishi Sunak announced his Spring 2020 budget. Along with an insight into how the government plans to reduce the economic impact of Coronavirus and increased public spending he also announced a number of measures that will affect your road use and vehicle choices in the coming years.

The company car tax rates were confirmed at the reduced rates announced earlier this year. For cars first registered from the 6th of April 2020, most of the tax rates will have been reduced by two percentage points. This will then be increased by one point for the tax years 2021/22 and 2022/23 and then these rates will be frozen until 2024/25.

The reduction and then gradual increase over the following years is due to the way that vehicle emissions are tested, and the change the new WLTP testing will have on the ratings of specific models.

Capital allowances are a way in which businesses can claim back some of the cost of cars they buy, deducting part of the value from the profits before tax is paid. In his budget, the Chancellor announced that going forward only zero-emission vehicles will qualify for a 100% first year allowance rate. The threshold for the main rate of 18% has also been reduced with vehicles only qualifying if they have emissions of 50g/km CO2 or less. Anything over 50g/km CO2 will now be eligible for the special rate of 6%. These rates will come into effect from April 2021.

For the 10th consecutive year fuel duty remains frozen at the current rate until April 2021.

We are all aware that the government is pushing for more drivers to take up electric vehicles and reduce the number of vehicle emissions as part of their plans for the UK to become carbon neutral by 2050.

There’s been some uncertainty in the last couple of months over the plug-in vehicle grants, which has now been solved by the Chancellor announcing that this will continue to be available until 2023. Although the grants for electric vans, trucks, taxis and motorbikes remains the same the amount available for drivers getting a new electric car has reduced by £500 to £3,000.

New restrictions mean that drivers will also be unable to apply for the grant if their car has a purchase price of over £50,000. When asked by the BVRLA the Office for Low Emission Vehicles has advised that this is the price paid by the customer not the recommended retail price and would include the number plates, vehicle excise duty (also known as VED or road tax), and VAT. It excludes any optional extras, delivery charges, and the first registration fee. They also advised that any discount on the vehicle must be applied to the purchase price before the application of the plug-in grant.

Another measure the Chancellor announced that will benefit the electric market is the removal of the VED surcharge on fully electric models until April 2025. This means that electric vehicles which cost more than £40,000 will no longer have to pay the £320 surcharge.

£500 million will also be spent on improving the UK’s electric vehicle charging network, including a rapid charging fund to help businesses with the cost of connecting their fast charging points to the grid.

Not only did the budget look at the cars we drive but also the roads we drive them on, with an investment of £27 billion for projects like the A303 bypass tunnel near Stonehenge, improving the A66 in the North East and the Lower Thames Crossing in the South East.

The Chancellor also announced plans for an additional £2.5 billion over the next five years to be spent repairing potholes in roads across the country.

Other measures include an investment of £300 million in improving our air quality, which includes making funds available to local governments who are working to reduce emissions in their city centres.