UK Budget 2008: What it Means to You

High-polluting vehicles will be hit harder, but incentives for green cars will be introduced and fuel duty rises shelved, announced Chancellor Alistair Darling in his 2008 budget.

Fuel duty
Lobbying from consumer and freight organisations, as well as record increases in oil prices, have convinced Chancellor Alistair Darling to delay planned fuel duty rises by six months.

A rise of 2p per litre had been planned, but pressure from lobby groups and consumer unrest at the high cost of motoring has led to Darling shelving the plans.

But fuel duty will rise by 0.5p per litre in real terms in 2010, warned the Chancellor.

Road tax
Road tax will be regraded to punish those who buy the most polluting vehicles and encourage manufacturers to drive down emissions from their cars.

From 2010 cars that emit less than 130g/km – the proposed EU target for fleet-wide emissions by 2012 – will pay no car tax at all in the first year. A higher first year rate will be introduced on the most polluting cars. Currently a Band G vehicle that emits more than 225g/km pays £300 per year.

‘It is right that if people choose to buy a more polluting car that they should pay more in the first year to reflect the environmental cost,’ Darling said.

Darling announced that money will be set aside to develop road-pricing schemes and – as expected – announced that biofuels will not be subsidised from 2010, saving the Treasury over £500m a year.

Darling has scrapped the tax break on biofuels due to environmental concerns about the sustainability of biofuel crops. Instead the government will press ahead with existing plans to require petrol and diesel to include 5 per cent biofuel by 2010.

Other measures
It is believed that global economic pressures have delayed plans to introduce harsher green taxes on high-polluting vehicles.

Announcements on a showroom tax on so-called gas-guzzlers of up to £1,000 and laws that would force oil companies to develop more sustainable biofuels were not announced.

A report published alongside the budget called for -whole-life running costs of cars to displayed on new cars and clearer environmental information on advertising provided by manufacturers to indicate the relative greenness of their cars.