What Does the Budget Mean for Motorists?
Chancellor Philip Hammond has made his first statement. The government was keen to make sure we all knew they were prioritising ‘JAM’s’, families who are Just About Managing. So expectations were high to gain for a few more pennies in our pockets, but will this translate into savings for motorists?
Salary Sacrifice scheme
The biggest news by far in the Autumn Statement was the changes to be made to the Salary Sacrifice Scheme. These changes shouldn’t come as a massive surprise as the Government has had Salary Sacrifice schemes in their crosshairs for a while now.Under this scheme employees can take a reduction in their salary in return for non-cash benefits which until now have included company cars, gym membership, health screening and computers. The benefits for the employee is the reduction in salary is pre-tax meaning the amount of earnings to pay National Insurance and Tax on are reduced. The golden age of what are termed ‘middle class perks’ is now due to end. From April 2017, most perks will be taxed in the same way as cash income. There are a few perks that will escape the Salary Sacrifice cull – if you drive an ultra-low emissions vehicle, you can continue to do so, childcare vouchers, cycle to work schemes and pension contributions will all also remain part of the salary sacrifice scheme.
Insurance Premiums are set to rise
Many motorists gave a cheer of delight when the Government announced plans to tackle the growing number of whiplash claims and reduce, on average, insurance costs by around £40.
After this piece of good news comes a little bad news. Insurance premiums are due to rise again in June 2017. There will be a 2% rise to 12%. This will be the third rise in Insurance Premiums in the past 18 months, leading the cost to double in this time. It is estimated motorists now pay on average £109 more on their insurance premiums compared to 2 years ago, due to the rise in premiums.
There is some good news ...
Fuel Duty will be frozen for the seventh-year running making it the longest freeze in fuel duty for 40 years. In terms of savings for drivers, a car driver can save on average £130 per year and a van driver could save up to £350 per year due to this freeze.
There is a slim chance the state of our roads could improve a little too with £220 million being spent on improving local roads, public transport, and easing congestion.
Company car drivers could plan ahead now to save in the future. Benefit in Kind rates on ultra low emissions vehicles will be dramatically reduced in 2020/2021 as the Government continue to incentivise their use.
Do you think the Autumn statement did enough to reduce costs for motorists?
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