Spring Budget 2023: what it means for motorists

March 15, 2023 by

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Chancellor of the Exchequer Jeremy Hunt has announced that fuel duty will be frozen during the Spring Budget announcement and the 5 pence per litre discount will be extended for a further 12 months. Read on to find out what the spring budget means for motorists.

Fuel duty frozen

There were rumours of an 11 pence increase in fuel duty in the lead-up to the spring budget, however this rise will not take place.

Fuel duty is the tax added to every litre of petrol and diesel sold at UK forecourts. It’s been frozen at 52.95 pence since 2011 and, despite growing pressure from environmentalist groups to increase the tax, Jeremy Hunt has announced that fuel duty will remain frozen for a further 12 months.

5 pence-per-litre discount to be extended

On the 23rd of March 2022, a 5 pence-per-litre (PPL) discount on fuel duty was announced to assist motorists with skyrocketing pump prices.

While the discount was due to come to an end eight days after the spring budget this year, it has been extended for a further 12 months. This brings fuel duty down to 47.95 pence and costs the government an estimated £5 billion in lost revenue.

Road tax to increase

Road tax is going to increase to reflect inflation, as is to be expected around budget time. Last year’s Spring Statement saw Vehicle Excise Duty (VED) rise from £155 to £165. From the 1st of April 2023, VED will increase again to £180.

First-year road-tax rates, which are based on a car’s carbon dioxide (CO2) emissions, have also gone up, although cars which emit zero CO2 will still cost nothing. The cost for the least polluting vehicles will also remain at £10.

There’s a £5-per-band increase at the lower end of the scale, meaning cars which emit between 51 and 75 g/km of CO2 will now cost £30 for the first year of road tax as opposed to £25.

The highest polluting models see a much sharper increase. Models which emit over 255 g/km of CO2 will now pay £2,605 for the first year, up from £2,365 previously.

The so-called “luxury” car tax supplement has also been increased. This is an additional annual fee for drivers of cars that cost £40,000 or more (including options) for five years (from years two to six of the car’s life). This charge currently stands at £355 per year, however from the 1st of April this will increase to £390 per year.

Pothole repair fund to be increased

Those who have suffered damage to their car due to potholes will be pleased to hear that the government will be investing more cash in road repairs.

£500 million per year is currently placed in the pothole fund, however Jeremy Hunt has announced a further £200 million will go towards mending potholes across the UK.