What George Osborne’s budget means for motorists (who live in the UK)

George Osborne, Chancellor of the Exchequer and professional Roman haircut-wearer, has laid out the UK’s first all-Conservative budget in over 20 years, and it contains much news for motorists.

If you are indeed a motorist of the UK, this news may be of interest to you. If you are a motorist who doesn’t live in the UK, or indeed a non-motorist who lives in the UK, it may be of rather less interest. Consider yourself hereby forewarned.

Osborne’s juiciest car-related budgeting concerned vehicle excise duty (VED) – or road tax, as it’s more commonly known.

The chancellor noted that by 2017, the existing VED system – which offers cheaper tax discs for low-emissions vehicles – would see some three-quarters of all new cars paying no vehicle duty in the first year.

Describing that system as ‘not sustainable’, Osborne announced a new VED structure, in which duty on new cars would be charged in the first year according to emissions (as today, but with the boundaries likely shifted south), but after that taxed under a simple three-tier system: zero-emission, standard and premium.

Osborne stated 95 per cent of cars would fall into the ‘standard’ bracket, which would be charged at £140 per year. The new system is not expected to raise any more revenue than the current regime, but is hoped to offer a more ‘secure’ stream of revenue.

All cash raised from VED will, Osborne said, sit entirely within a new ‘Roads Fund’ dedicated to building highways.

Bemoaning that only 300 miles of new motorway have been constructed in Britain in the last quarter-century – the French, by contrast, have built over 2500 miles – Osborne stated: “From the end of this decade, every single penny raised in Vehicle Excise Duty in England will go into that fund, to pay for the sustained investment our roads so badly need. Tax paid on people’s cars will be used to improve the roads they drive on.”

Osborne also confirmed that fuel duty would remain frozen, with September’s previously scheduled increase in tax on petrol and diesel suspended.

He also announced the government would ‘consult’ on plans to extend the deadline for new cars taking their first MOT test from three to four years - a move that could, he said, save motorists over £100m a year.