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Car tax bands revised but fuel duty will go up

Car tax plans watered down in pre-budget report

Fuel duty is set to rise following today's pre-budget report

Fuel duty is set to rise

Car tax rates will rise for most drivers next year, the Chancellor has announced, but not by as much as feared.

The Chancellor has watered down plans for higher car tax bands in a bid to boost new-car sales and ailing car manufacturing in UK factories.

Some motorists were facing big car tax rises next year, with those driving large cars and expected to be worst hit by the CO2-based bands.

But following weeks of pressure from motoring groups, duty rates for all cars will only increase by a maximum of £5 in 2009.

Fuel duty rises

In his pre-budget report, Alistair Darling added that from 2010 those driving the most polluting cars will see their car tax rise by a maximum of £30, instead of up to £90 as originally planned.

People with the will see their car tax stay the same or fall by up to £30. Fuel duty, however, will increase for all drivers.

Petrol and diesel prices have been falling steadily over the past few months, which the Chancellor claims will keep the overall cost of fuel the same as this year.

‘Gambling with fuel prices’

But AA president Edmund King said Darling was ‘giving with one hand and taking away with the other’.

He added: ‘Darling is playing roulette with global fuel prices and could lose his gamble. It is a very big gamble as there are 32 million motorists out there and most of them have a vote. If the global price of oil increases this hike may come back to haunt the government.’

Darling said new motorway widening schemes would be paid for as part of a £3bn capital spending package brought forward from 2011 to now, and announced an extra £535m investment in low-carbon technologies, some of which will be spent on new trains.

Which? motoring editor Richard Headland said: ‘The full details of the proposed changes to road tax still aren’t clear – we will check out the small print before further advising drivers about the full impact of the Chancellor’s speech. 

‘However, high-mileage drivers are unlikely to be better off, as any rise in fuel duty is likely to compensate for the possible savings on car tax.’


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