Budget 2015: new road fund and car tax overhaul announced

“Every single penny” raised by vehicle excise duty will go into a new road fund to pay exclusively for highways maintenance by the end of the decade. George Osborne revealed the creation of the road fund in his July 8 Budget in one of the biggest reforms to motoring in recent years.

Osborne said: “We will create a new roads fund from the end of this decade and every single penny raised in vehicle excise duty will go into that fund to pay for roads. The tax paid on people’s cars will be used on the roads they drive on. It’s a fairer tax system for motorists.”

Vehicle excise duty will also be overhauled from 2017 because figures show that under the current scheme three quarters of all new cars would be exempt.

• Car tax: everything you need to know 

The 2017 system will see new cars paying based on updated emissions ratings that take new technology such as hybrids and pure-electric cars into account. After the first year, there will be three duty bands – zero emission, standard and premium.

No extra revenue will be raised by the new system but Osborne believes it’ll be “more secure” and fairer, too.

Osborne said it’s not right that those who can afford new cars pay no tax while those who can only afford as used vehicle have to shell out for tax when both are using the roads.

Fuel duty will also be frozen for the rest of the year, as previously announced, while the time limit on having the first MoT carried out will be stretched from three to four years, saving motorists “billions”.

What do you think of the changes affecting motorists in the 2015 budget? Let us know in the comments section below…

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