 |
Spring
Statement on Wednesday 23rd March 2022 The Spring Statement made in the House of Commons by the Chancellor of the Exchequer, Rishi Sunak MP, alongside the next forecast for the economy and public finances he commissioned the Office for Budget Responsibility (OBR) to prepare for publication on Wednesday 23rd March. Usually the Spring Statement, often referred to as the “mini-budget”, is much shorter than the main Budget in the Autumn but with the current cost of living crisis the Chancellor was under pressure to announce policies to tackle the energy price cap increase and soaring petrol prices following Russia’s invasion of Ukraine. Measures such as a £150 council tax rebate have put in place and the Chancellor confirmed a previously announced 1.25% increase in national insurance contributions will go ahead. Spring Statement As usual we have a prompt report on the statement and the measures announced by the Chancellor of interest to classic motoring enthusiasts within an hour of his sitting down in the House of Commons. |
| See a guide to Budget statement buzzwords. More... BBC NEWS briefing. More Spring Statement and related documents - see the HM Treasury webpages on the Chancellor's Statement & Related documents including the Spending Review 2021. Documents Office of Budget Responsibility (OBR) OBR overview of the March 2022 Economic and fiscal outlook. More OBR commentary on public sector finances What is Insurance Premium Tax? IPT is a tax on general insurance premiums, including car insurance, home insurance, and pet insurance. There are two rates of IPT: a standard rate of 12% and a higher rate of 20%, which applies to travel insurance, electrical appliance insurance and some vehicle insurance. IPT increased over the years - in 1994, the introductory standard rate of IPT was just 2.5%. But over the years IPT has increased, to 6% in 2015, then to 9.5% in November 2015, and in October 2016 it rose by 0.5% to 10%. The current rate of 12% means that IPT had doubled in only a few years. How much IPT are you paying on car insurance? Assuming your premiums for a daily driven car and a classic MGV8 are for example £400 and £250 the IPT before today's Autumn Budget Statement would be £78 pa. A 1% increase in IPT would raise that IPT charge by £6.50 pa to £84.50 pa. Fortunately that modest increase did not arise! See our earlier report on fuel duty Posted: 220316 Posted: 220323 @ 1350 |
Fuel
duty cut by 5p a litre Amid warnings that fuel prices could stay near record levels over the next few weeks, and following the UK's recent fuel crisis, the Chancellor announced a temporary fuel duty cut for 12 months, a saving of £100 for the average car driver in the UK. For an MGV8 driver covering 4,000 miles a year the saving from the 5p reduction in fuel duty and VAT will be around £36. Fuel duty has been held at 57.95 per litre for petrol and diesel since March 2011. Motoring groups had backed a fuel fuel duty cut. This will be welcomed by the car-dependent, key workers and all businesses that rely on road transport. See para 4.10 on page 34 of the Spring Statement Road Tax changes The Road Tax (VED) exemption for cars built over 40 years ago remains. VED will be increasing from 1st April 2022 following the proposal announced in the Autumn Budget 2021 that the increase would be in line with the Retail Prices Index (RPI). The new road tax rates for 2022-2023 affect all cars and vans in the UK and come into effect on 1st April 2022. There was no announcement of any introduction of any road tax or road use charges for electric car drivers. Rates of VED from 1st April 2022 The standard rate of road tax VED for cars registered before March 2001 has increased by 5.8% from £170 to £180. The VED rates for cars over 1,549cc will rise by 5.4% to £295 for the tax year 2022-2023 from the current £280. So RV8 owners will face a modest £15 increase in their road tax on renewal from 1st April 2022. Road tax rates for cars registered before March 2001 UK public warms to road pricing as fuel duty replacement is considered The Government's ban on the sale of new petrol and diesel vehicles from 2030 has made reform of motor taxes an urgent question for the Treasury because the switch to electric cars means almost £30bn in fuel duty raised annually for the Treasury will need to be replaced. But politicians have shied away from introducing road pricing as an alternative, however recent polling for the Social Market Foundation suggests that the conventional political wisdom that voters are opposed to road pricing no longer holds true. Its research found that 38% back road pricing to replace fuel duty and other taxes, with just over a quarter opposed (26%). The sales trend for electric vehicles (EVs) is significant - last month sales of battery electric cars reached a record 33,000, about 15% of all new vehicles sold in the UK in September, including almost 7,000 Tesla Model 3s. But EVs remain a small fraction of all cars on UK roads, currently between 1% and 2% of all cars on UK roads. There was no announcement on this topic. Capital Gains Tax changes Unlike other types of investment assets, the profit you make upon the disposal of a classic car does not generally attract Capital Gain Tax (CGT). This is because cars are generally classed as a ‘wasting asset’ that is estimated to have less than 50 years’ worth of use remaining. A report by the Office of Tax Simplification, published in November 2020, recommended that CGT rates should be increased to bring them into line with income tax. But it would be unlikely to raise significant extra amounts of tax, as it is typically paid by only about 275,000 taxpayers and raises less than £10bn a year. There was no announcement on this topic. Wealth Tax There has been much political discussion about a one-off wealth tax to help pay for the huge debt built up by the UK Government providing various levels of COVID support measures. There was no announcement on this topic. Insurance Premium Tax (IPT) Insurance premiums have the additional cost of IPT, currently 12% so for motorists the possibility of a rise in IPT rates was a concern. There was no announcement on this topic. |
| |||
