The 2014 Budget fuel duty and road tax

Chancellor of the Exchequer, George Osborne, announced his 2014 Budget yesterday with a number of the measures affecting motorists. These changes range from road tax to business vehicle benefits.

Fuel duty in the 2014 Budget

Many drivers will be happy to find out that there will be no fuel duty rise this year, which the Chancellor had already confirmed in his 2013 Autumn Statement. This means that there will be no rise in fuel duty prior to the 2015 general election. Osborne was keen to point out that the price of fuel is now 20p cheaper under the Coalition Government than it was a few years back, thanks to numerous fuel duty freezes. To date, fuel duty has now been frozen for over four years, the longest duty freeze for over 20 years.

Road Tax in the 2014 Budget

Road tax discs will no longer need to appear on vehicles from October 1st but the Vehicle Excise Duty (VED) will still need to be paid for. VED will be more expensive as the rates increase in line with the Retail Price Index but drivers will have the option to pay by direct debit in annual, biannual or monthly instalments. However, a 5% surcharge will apply to biannual and monthly payments. For those driving Euro IV and V light goods vehicles, the government will freeze VED in 2014/15.

Owners of classic cars will see the formerly fixed cut off date under which classic cars no longer have to pay road tax, be made rolling. This means that from April 1st, classic cars constructed 40 years ago or more will be exempt from VED on an automatic rolling basis on 1st April each year.

More tax changes in the 2014 Budget

Meanwhile, company car owners will see an emissions based tax rise, with the percentage of list price subject to tax increasing by two percentage points for cars emitting more than 75 g/km of CO2, to a maximum of 37 per cent, in 2017/18 and 2018/19. The government incentive for Ultra Low Emission Vehicles will be reviewed in the 2016, to inform decisions on company car tax from 2020/21 onwards.

Those who receive company funded fuel used privately will see their benefit in kind tax bills rise from April 6th this year, from £21,100 for 2013/14 to £21,700 for 2014/15. Van drivers will also see a rise in their van benefit in kind tax charge from £3,000 in 2013/14 to £3,090 in 2014/15. Alongside this, the van fuel benefit charge multiplier will also increase from £564 to £581.

The Office of Budget Responsibility (OBR) revised its growth forecast up again, saying the economy will grow 2.7% in 2014, 2.3% next year, 2.6% in 2016 and 2017 and returns to long-term trend of 2.5% thereafter. To increase consumers' disposable income, the personal allowance threshold above which workers start paying income tax will rise to £10,500.

We'll keep you updated on more motoring changes from the government in 2014 Budget as it comes into effect.