Vehicle Excise Duty (VED)
The Chancellor has addressed falling revenues from Vehicle Excise Duty by reforming VED for cars registered after April 2017. First year rates (FYRs) will vary according to the CO2 emissions of the vehicle, but a flat standard rate of £140 for all cars except those with zero grams of CO2 per kilometre (CO2 g/km), which will have a £0 standard rate.
Cars with a list price above £40,000 will also have a supplement of £310 per year for the first 5 years in which the standard rate is paid.
The new VED system will be reviewed as necessary to ensure incentivises take-up of the cleanest, greenest vehicles.
The Government will create a new Roads Fund, which from 2020-21 will be subsidised directly by the VED revenues above, to help deliver on the election manifesto pledge to invest £15 billion into the national road network over this Parliament (2015-2020).
A second Roads Investment Strategy will also be developed and published before the end of the current Parliament, which will be informed by and based on the recommendations and financial record of the Roads Fund.
Company Car Tax
As announced at the previous pre-election Budget, from 2019-20 the appropriate percentage of the vehicle’s list price (subject to tax) will increase by 3 percentage points for cars with CO2 emissions above 75g/km, up to a maximum of 37%. There will be a 3 percentage point differential between the 0-50 and 51-75g/km CO2bands, and between the 51-75 and 76-94g/km bands.
The Government will consult on a proposal to extend the period before a car needs to get its first MOT test from 3 years to 4.
However, Vans are currently excluded from this proposal.
The rate of corporation tax rate (currently 20%) will be cut further to 19% from 2017, and 18% in 2020.
Annual Investment Allowance (AIA)
From 1 January 2016, the permanent Annual Investment Allowance level will be increased from £25,000 to £200,000 for all qualifying investment in plant and machinery (including Vans – Excluding Cars) made on or after 1 January 2016. This is a commitment for the remainder of the Parliament.
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