Key points from the Budget

20th April 2011

The Chancellor's 1p a litre cut in the rate of fuel duty grabbed the headlines in what was described by some as a Budget for road users, but there were a number of other significant announcements for van operators.

The fuel duty escalator has been replaced by a 'fair fuel stabiliser'.  When oil prices are high, fuel duty will increase by the rate of inflation only. However, if it falls below a set trigger price (around $75 a barrel, though as yet unconfirmed) on a sustainable basis, the Government says it will increase duty by inflation plus 1p per litre annually.

Fuel duty will rise again in January 1 2012, by a planned 3.02p per litre.  A further increase is set for August 1 2012.

The tax-free mileage reimbursement rate for employees who use their own vans for business mileage will increase to 45p from 40p for the first 10,000 miles from April 6, 2011.  However, the rate for mileage beyond 10,000 miles remains at 25p per mile.

The van fuel benefit charge - on which tax on ‘free’ van fuel is paid - is frozen at £550.  The van benefit-in-kind tax charge was also frozen for 2011/12, at £3,000.

Vehicle Excise Duty will increase by the rate of inflation - except for commercial vehicles over 3.5 tonnes, for which it is frozen in 2011-12.

The Chancellor also indicated in the Budget that future changes to benefit in kind company car and van tax would be based on the vehicles' CO2 emissions figures, to encourage more people into lower emission vehicles.