U-Turn on tax

A vote-sweetening Government U-turn on vehicle excise duty looks likely. Changes introduced in the last Budget had meant Post 2001 cars would have faced massive tax hikes this year – £245 or more for ordinary family saloons – penalising over 26 million motorists.

Now, however, it’s believed Chancellor Alistair Darling will not impose the retrospective element of the tax on cars purchased between 2001 and 2006 for at least another year, although cars purchased since that time will continue to be targeted. This had meant that bread-and-butter family saloons, for example a Mondeo registered in 2002, would have attracted double its current VED in 2010, slashing its secondhand value and making it almost impossible to sell.

At the time rebel MPs voiced their disquiet over the proposed new levies and the U-turn is seen as a move to deflate further damaging in-party rebellions and ride the crest of the feelgood wave emerging since bank interest rates dropped.

It is expected that these changes will be made clearer in the Chancellor Darling’s Pre-Budget Report, expected next week.