Report on the Summer Budget 2015

As usual we have a prompt report within an hour or so of the Chancellor sitting down in the House of Commons after announcing the measures in his Budget statement which will be of interest to the classic motoring enthusiast.

The Summer Budget 2015 statement made in the House of Commons by the Chancellor of the Exchequer, George Osborne, on Wednesday 8th July provided an update on the Government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility. These forecasts are published alongside the Budget statement. Full details of those announcements are available on the HM Treasury website .

Headlines for for classic car motoring

No fuel duty changes this year - fuel duty is frozen. The RPI inflation Fuel Duty increase due to apply from September 2015 was been cancelled previously.

No changes to Vehicle Excise Duty rates and bands - previously it was announced that from 1st April 2015 Vehicle Excise Duty (VED) rates for cars, vans, motorcycles and motorcycle trade licences would increase by RPI.
Vehicle Excise Duty classic vehicle exemption - as announced at Budget 2014, from 1st April 2016 a vehicle manufactured before 1st January 1976 will be exempt from paying VED. This measure will require approval during the passage of the Finance bill as it's not automatic.

Insurance premium tax rise -
from 1st November, 2015 the standard rate of Insurance Premium Tax will increase by 3.5% from 6% to 9.5%. So on an annual premium of say £250 that would see an increase of just under £9 to just under £24.

Reform the regulation of the insurance claims management sector
The government will reform the regulation of the claims management sector to help to drive out further unnecessary costs from insurance premiums. A welcome move for motorists and hopefully the reduction is motor insurance premium escalation.

See several paragraphs from the HM Treasury support document. More
More information on Summer Budget 2015

Full details of the Budget announcements are available on the HM Treasury website released following the Chancellor's statement to Parliament.

Budget 2015 document
from HM Treasury. More

Guide to Budget statement buzzwords. More

Preview of the Budget Statement 2015

See our preview. More



Why does the Chancellor hold the "Red Box" up for photos as he leaves for the House of Commons on Budget day?
Seeing the red case on the news item reminds me of an article in a newspaper today which recounts how in 1868 George Ward Hunt, the chancellor in Disraeli's short lived government, went to the House of Commons but left his budget speech behind at home. Now chancellors lift the red box as they leave their "house" to show they haven't forgotten their speech.


Posted: 150708 @ 1422
Major reform to vehicle excise duty (VED) to create a new Roads Fund
Para: 1.250
The government believes that a modern infrastructure network is vital. By 2020-21, this government will have trebled investment in improvements to the national road networks compared to 2012-13 levels, investing over £28 billion in enhancements and maintenance of national and local roads. To ensure that future roads investment is sustainable, this Budget announces a reform to vehicle excise duty (VED) to create a new Roads Fund. VED will be reformed for cars registered from April 2017 to make it fairer for motorists and reflect improvements in new car CO2 emissions. The new VED system will be reviewed as necessary to ensure that it continues to incentivise the cleanest cars.

Summer Budget 2015 document, Page 56


Para: 1.251
From 2020-21 the government guarantees that all revenue raised from VED in England will be allocated to a new Roads Fund and invested directly back into the strategic road network. Further details of the VED reform are set out in paragraph 2.145.
Summer Budget 2015 document, Page 56

MOT changes for new cars
Para: 1.208
To further assist car owners, the government will extend the deadline for new cars and motorcycles to have a first MOT test from 3 years to 4, saving motorists more than £100 million per year, subject to public consultation and cost-benefit evaluation.
Summer Budget 2015 document, Page 47
Reform the regulation of the claims management sector
Insurance
Para: 1.207
The government remains committed to ensuring customers can purchase insurance at a fair price. The cost of home contents insurance has fallen by 8% since last year, and the cost of comprehensive private motor insurance has fallen by 10% in the last 3 years. The government will reform the regulation of the claims management sector to help to drive out further unnecessary costs from insurance premiums. This Budget announces a fundamental review of the regulation of claims management companies (CMCs), led by the Chairman of the Chartered Trading Standard Institute Board Carol Brady, which will report to HM Treasury and the Ministry of Justice in early 2016. In addition, there is also a case for reform of the fees that CMCs charge consumers, particularly in those instances where consumer complaints fall within the remit of the Financial Ombudsman Service. Therefore, the government will bring forward proposals for the introduction of a cap on the charges that CMCs can apply to their customers, and will consult on how this will work in practice.
Summer Budget 2015 document, Page 47

Insurance premium tax rise
Para: 1.209
From 1 November, the standard rate of Insurance Premium Tax will be increased from 6% to 9.5%. The Insurance Premium Tax standard rate will remain lower than that of many other EU Member States. It will, for example, continue to be much lower than the 19% tax rate that applies in Germany. Seperately, the government will also introduce VAT provisions to level the playing field for insurers. This will deter insurers from routing costs via offshore associates and ensure UK VAT is accounted for an all repair services on UK insurance contracts.
Summer Budget 2015 document, Page 47
See also para 2.133 on page 90

 Measures seen in previous Budgets

VED exemption now a rolling concession

In the Budget 2014 in March, tucked away on page 76 of the support document released by HM Treasury shortly after the Chancellor sat down, was the welcome brief announcement "the Government will introduce a rolling 40 year VED exemption for classic vehicles from 1st April 2014". (Para 2.153, page 76).
That rolling VED exemption followed the earlier announcement in the support document issued by HM Treasury shortly after the Budget Statement made in March 2013 that the Government would extend the cut off date from which classic vehicles are exempt from VED by one year. So making it a rolling feature was very good news. See our additional information on VED exemption.
VED exemption guide & flowchart & More


Fuel duty freeze

Over the last four years we have seen fuel duty frozen and VED exemption reintroduced for classic car owners, both measures that have been a real benefit for classic car enthusiasts.

Abolishing the paper tax disc and payment of road tax by Direct Debit
These measures were confirmed as part of a simplification of VED administration and were introduced by DVLA in October 2014. See our NEWS reports. More & More