Spring Budget explained: what you can do next | AutoTrader
Find out how the Spring budget will affect cars and vehicle owners from April 2023 onwards.
Words by: Nimisha Jain[2]
Published on 29 March 2023
| 0 min read
• VED will go up in line with the retail price index inflation of 10.1% from 1 April 2023• Levy charges for lorry drivers will be frozen till 31 July 2023 • Fuel duty will remain frozen at 52.95 pence per litre for petrol • Companies will be able to claim back full capital allowances on plant and machinery As part of the Spring Budget of March 2023, Chancellor Jeremy Hunt has announced a number of changes that will affect drivers and businesses – including an increase in vehicle excise duty, fuel duty freeze and 100% capital allowance on plant and machinery. Here’s how these changes may affect you from April 2023 onwards.
Vehicle Excise Duty (VED) to increase from April 2023
Vehicle Excise Duty (also known as vehicle tax, car tax or road tax)[3] is set to rise again in line with inflation of 10.1% from April 2023 for all cars, vans and motorcycle owners.The amount of tax you pay will depend on your car’s CO2 emissions and the date it was first registered. For cars registered on or after 1 April 2017, the first-year road tax range will increase from £10 – £2,365 to £10 – £2,605 while the standard rate is being increased from £165 in 2022-23 to £180 in 2023-24. Cars that cost more than £40,000 will have to pay a £370 premium car tax, an increase from the £355 in 2022-2023. All fully electric cars registered by 31 March 2025 are exempt from paying. The VED range for cars registered between March 2001 and April 2017 is being increased from £20 – £630 in 2022-23 to £20 – £695 in 2023-24. And finally, VED for cars registered before March 2001 will increase from £180 to £200 for 1549cc and below engine cars, and cars with an engine above 1549cc will now pay £325 in 2023-24 as opposed to 2022-23’s £295 tax rate. Fully electric cars[4] don’t have to pay VED until 1 April 2025.
HGV levy remains suspended till 31 July 2023
The Spring Budget 2023 announced that the HGV levy relaxation will remain in place until 31 July 2023, after which the levy costs will be revised and charged again.All heavy goods vehicles that weigh over 12 tonnes pay a levy cost[5] for the wear and tear on the UK roads. During the pandemic, the government suspended this payment for UK-registered HGVs from 1 August 2021 onwards to help reduce cost issues and tackle driver shortages. Since then, it’s been extended twice.
Fuel duty frozen for another year
The government also confirmed that fuel duty will not be increasing in line with inflation to support households and businesses during the increasing cost of living in the UK. The fuel duty freeze is being extended for another year, so car owners can keep benefitting from the 5p fuel duty cut.Fuel duty is tax paid on fuel used to run your cars or to heat your home. It is automatically added to the price you pay for fuel each time you refuel your car. For the past 12 years, fuel duty has been frozen at 52.95 pence per litre for petrol, diesel and biodiesel to help keep the cost of driving in check. It will cost the government £5 billion to maintain the current level of fuel duty for the next 12 months.
Potholes fund to increase to £700 million in 2023-24
To tackle the damage the wet and cold weather bring each year to our UK roads, the government has announced it will allocate an additional budget of £200 million to the previous £500 million.This additional funding will help councils maintain their local highways, parks and bridges, and repair the drainage system. This will help further the government’s goal of ‘driving infrastructure investment and delivery’ and is expected to help repair up to four million potholes in the UK. Devon will receive one of the highest shares of this budget, with just over £9 million allocated to tackling potholes, followed by Lincolnshire, North Yorkshire, West Yorkshire, Norfolk, Greater Manchester and Kent receiving over £6 million each.
Businesses to benefit from 100% capital allowances on plant and machinery
Companies will be able to claim 100% capital allowances on machinery investments made between 1 April 2023 – 31 March 2026. This has been referred to as ‘full expensing’, which means companies will be able to write off the cost of investment in one go, and they will get a tax cut of 25p for every pound a company invests.Full expensing covers lots of different things including brand-new vehicles and machinery such as vans, lorries, tractors, forklift trucks, pallet trucks, and construction equipment such as excavators, compactors, and bulldozers. Cars are not covered under full expensing. The government have stated that “machinery must be new and unused, must not be a car, given to the company as a gift, or bought to lease to someone else.” The government has said they have introduced this as “investment is a key driver of productivity growth but business investment has been a long-standing weakness in the UK.” Full expensing has therefore been brought in to encourage businesses to make more investments. It is important to consider the capital allowances and other tax implications before you purchase new machinery. You can
References
- ^ News (www.autotrader.co.uk)
- ^ Nimisha Jain (www.autotrader.co.uk)
- ^ Vehicle Excise Duty (also known as vehicle tax, car tax or road tax) (www.autotrader.co.uk)
- ^ Fully electric cars (www.autotrader.co.uk)
- ^ levy cost (www.autotrader.co.uk)
- ^ vans (www.autotrader.co.uk)
- ^ lorries (www.autotrader.co.uk)
- ^ tractors, forklift trucks, pallet trucks, and construction equipment (www.autotrader.co.uk)
- ^ You can