The budget and what it means to motorists

There was a bounty of budget giveaways in Chancellor Rishi Sunak’s first delivery from the dispatch box, which is sure to be named the ‘Coronavirus Budget’. This included some reassuring measures for drivers.


Along with the headline grabbing decision to freeze fuel duty for a 10th year in a row and a new Pothole Fund that will provide £500 million spending a year, there was news about company car benefit-in-kind tax and capital allowances as well as plug-in car and van grants and the electric vehicle recharging infrastructure. 

Fuel Duty FreezeBudget papers reveal the fuel duty freeze will save the average car driver £1,200 compared to the pre-2010 escalator.  

Capital InvestmentIn addition to the Pothole Fund, the Chancellor announced £640 billion of gross capital investment for roads by the end of 2024-2025. This includes the largest ever investment in English strategic roadsequating to a significant spend for Britain’s road structure. 

Fast-Charging NetworkThe Government is to make £500 million available over the next five years to support the roll-out of a fast-charging network for electric vehicles. The aim is to ensurthat drivers are never further than 30 miles from a rapid charging station. 

Company CarsThe company car previously announced benefit-in-kind tax rates for 2020-2021 to 2022-2023 were confirmed in the Budget. But the Chancellor went on to announce that the rates would then be frozen for the following two financial years, that is 2023-2024 and 2024-2025. 

The changes to the carbon dioxide (CO2) emission testing under the new Worldwide harmonised Light vehicles Test Procedure (WLTP) which comes in from April 2020, means that the Government has adopted two separate rates for benefit-in-kind company cars – one for those first registered before April 6, 2020 and those first registered from April 6, 2020.  

Vehicle Excise Duty: The rates from April 2020 will, as usual, increase in line with the Retail Price Index. However, the Government has announced that from April 1, 2020 and until March 31, 2025 all zero emission vehicles will be exempt from the Vehicle Excise Duty ‘expensive car supplement’. This is to encourage the uptake of zero emission vehicles and to support the phasing out of petrol and diesel models. Additionally for zero emission vehicles, the Government is to extend the 100% first year capital allowances for four years. 

Plug-In Car GrantThe Chancellor also confirmed that after listening to industry lobbying, there is to be an extension of the Plug-In Car Grant, first introduced in 2011, through to 2022-2023However, it has been revealed that the existing zero-emission Plug-In car Grant of £3,500 would be cut to £3,000, while cars costing £50,000 or more would be excluded. 

He also confirmed that the Government was “considering the long-term future of consumer incentives to support the transition to zero emission vehicles.” This is linked to the phase-out for new petrol and diesel cars and vans from 2040. 

All information is correct at time of publication.

+ More