In his Autumn budget, Chancellor Philip Hammond announced that the fuel duty rise, which was scheduled for April 2018, has been cancelled and rates have been frozen at 57.95 pence a litre for the eighth year, saving the average driver £160 a year
Fuel duty will be frozen for an eighth year in 2018-19. Fuel duty freezes since 2011 have been estimated to have saved the average driver £850 by April 2019, compared to what they would have paid under pre-2010 plans.
Freezing fuel rates is expected to cost the Exchequer £830m in 2018/19, £825m in 2019-20 and £845m in 2020/21.
As well as freezing fuel rates, the government has announced that it will review whether the existing fuel duty rates for alternatives to petrol and diesel are appropriate, ahead of decisions at Budget 2018.
Currently hybrid cars which run on both petrol/diesel and electricity are treated as either petrol or diesel cars when working out advisory fuel rates. This can cause a problem for employers calculating mileage payments for electric and hybrid cars.
In the meantime, the government will end the fuel duty escalator for Liquefed Petroleum Gas (LPG) and will freeze the LPG rate in 2018-19, alongside the main rate of fuel duty.
Quentin Willson from FairFuelUK said: ‘We are pleased that the Chancellor has understood the debilitating effect of raising fuel duty on consumers, households, businesses and the broad economy. He knows that now is not the time for gesture politics and that’s why he’s listened to the everyday anxieties of individuals and continued the duty freeze.’
Mileage rates for landlords
Hammond also introduced a measure to give landlords the choice of whether to use fixed rates per business mile to calculate their allowable deductions for motoring expenses or continue to deduct annual running costs and claim capital allowances. However, this choice will not be available to landlords who are companies or in mixed partnerships.
The measure, effective from 6 April 2017, will simplify tax computations for unincorporated property businesses who choose to use mileage rates.
It will also include transitional arrangements to allow landlords who previously claimed mileage rates under the Extra Statutory Concession to start using mileage rates again, from 6 April 2017, without having to wait to acquire a new vehicle.
This measure is expected to have a negligible impact on the Exchequer.
Report by Amy Austin
