Pay-per-mile car tax update issued by Labour following Rachel Reeves Budget

Pay-per-mile car tax update issued by Labour following Rachel Reeves Budget
-Credit: (Image: Reach Publishing Services Limited)


Pay-per-mile car tax changes have been ruled out by Chancellor Rachel Reeves as drivers face an uncertain future. The new Labour Party will not introduce road pricing as Chancellor Ms Reeves failed to mention the changes during her Autumn Statement speech this afternoon.

Prior to the Budget, an HM Treasury spokesperson told Birmingham Live: "We have no plans to introduce road pricing. We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets."

Edmund King, president of the AA, said: “It is time for the country and our politicians to start seriously debating how we fund roads and sustainable transport in the future. It offers attractive possibilities to make the tax system more flexible and responsive to the needs of road users. For instance, it could offer free credits or compensation for excessive or overrunning roadworks.”

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The Chancellor announced today that the temporary 5p reduction on Fuel Duty would be extended until March 2025. This continues the reduced Fuel Duty at 52.95p per litre. It was also announced that the current fuel duty rates would be frozen for a further 12 months.

These announcements are welcome news as the price of fuel appears to have stagnated around the £1.50 per litre. With the increasing uncertainty in the Middle East, the cost of fuel could easily rise again so the 5p reduction remains a topical relief although it is difficult to evidence if the consumers have actually benefitted from the 5p reduction with the prices continually fluctuating.

The hope is that this will help with the impact of UK transport costs within the supply chain, further reducing the cost of goods to the consumer. Mike Parkes, technical director at GoSimpleTax: “It’s a mixed Budget for self-employed people. The commitment to no changes to income tax, national insurance, and VAT rates is welcome. Similarly, no rise to fuel duty will be good news to many who work for themselves and rely on vehicles.

“The Chancellor promised to modernise HMRC systems and clamp down on unpaid tax debt and penalties. It’s never been more important for the self-employed to keep on top of their finances and hit deadlines to avoid fines. Despite the headlines around HMRC investment, the statement didn’t provide clarity on the timelines for the delayed Making Tax Digital for Income Tax. There was mention of a corporate tax roadmap, but self-employed people also need a clear timeline to prepare for changes.

“Some contractors could shoulder the burden of the changes to Employers’ National Insurance. Those contracting through umbrella companies and paid a flat tax rate will find the rise in National Insurance for employers will reduce their take-home pay, effectively making them collateral damage.”