Emergency Budget: How will it affect the motorist?

George Osbourne promised at the beginning of yesterday’s emergency budget that he wouldn’t hide the hard choices from the British people. He certainly didn’t, but the motorist was hit no harder than anyone else.

The Chancellor promised that £4 out of every £5 required to reduce the national deficit would be found through spending cuts rather than tax rises, but it is the headline tax rise which will impact on the nation’s drivers.

As some predicted, Mr Osbourne chose to increase the rate of VAT from 17.5 per cent to 20 per cent from January 4 2011. This will have an effect on the purchasing a cheap irish registration, a cheap £50 registration number costs £50 plus £8.75 VAT plus £80 TOTAL £138.75, however in January with VAT increase it will cost £50 plus £10 VAT plus £80 Transfer Fee TOTAL £140.

The price at the pumps will increase thanks to the rise, but there is no accompanying rise in fuel duty beyond that which was already expected.

The additional 2.5 per cent will also impact on the cost of buying a car, as well as having one serviced. As an example, the price of a £16,000 Ford Fiesta 1.4 TDCI (one of the country’s most popular cars) is set to increase by £400.

In line with the Conservatives pre-election proposals, the Chancellor suggested that the impact of oil prices on the price at the pumps would be examined to see if there’s a way of stabilising them in the future. Whether this results in the adoption of a fuel duty stabiliser remains to be seen.

The Liberal Democrat policy of a rebate for rural areas will also be studied.

The future of the Department of Transport’s budget will be detailed in October, but with the unprotected departments facing a 25 per cent cut in their spending it is safe to assume that some road building projects will have to be shelved.

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