UK Budget 2011 Motorists: Fuel duty will be cut by 1p per litre from 1800 GMT. image

The UK government Wednesday said it would increase taxation on oil and gas production to 32%, to raise an extra $2 billion while the oil price remains high.

The Government is to provide a further £100 million to local authorities to repair the country’s potholed roads.

Admitting that “the price of petrol has become a huge burden on families”, Mr Osborne went on to describe how the cost of filling up a typical family car had increased by £10 in the last six months.

A freeze in fuel duty and a 1p cut, rather than the 5p increase planned, prevents more pain at the pumps and applies a ‘much needed tourniquet to drivers.

“Budget 2011 recognised the strength of the UK manufacturing sector and its ability to steer our economy out of recession,” said Paul Everitt, SMMT Chief Executive. “We are pleased to see that the Chancellor’s plans have a strong focus on manufacturing and making the UK an attractive place to invest. The outlook is certainly still challenging, but we are encouraged by the impact these measures will have on our sector and the wider economy.”

“We and millions of AA members, two-thirds of whom have cut back because of record fuel prices, applaud the Chancellor’s decision to listen to the AA campaign to cut fuel duty rather than hike it by 5p a litre. A £2.50-a-tank hike would have been the last straw for poorer drivers who spend a quarter of their household income on motoring,” said Edmund King, the AA’s President.

2011 UK Budget – Motorists

• Fuel duty – from 6pm today (Wednesday, March 23) there will be a 1p per litre cut in fuel duty in recognition of the high current price of oil.
• The 2011-12 inflation-only increase of 3.02p per litre in fuel duty has been deferred to January 1, 2012.
• The April 2012 increase in fuel duty will be implemented on August 1, 2012
• The Government has abolished the fuel duty escalator and is to replace it with a fair fuel stabiliser that increases tax on North Sea oil production when oil prices are high – the level at which it will be triggered will be set after discussions with oil and gas companies, and motoring groups.
• Vehicle Excise Duty will increase by RPI Indexation only in 2011-12 and rates for HGVs will be frozen
• Approved Mileage Allowance Payments (AMAPs), which are tax-free and paid to employees who drive their own cars and vans on business trips will increase from 40p to 45p for the first 10,000 miles from April 6, 2011 but will remain at 25p per mile thereafter.
• Company car benefit-in-kind tax rates will increase by one percentage point per 5 g/km in 2013-14 with rates for cars emitting less than 95 g/km of CO2 frozen.
• The fuel benefit charge multiplier used to calculate the tax payable on ‘free’ fuel for company cars will increase from £18,000 to £18,800
• There are no changes in either the van fuel benefit charge or the van benefit-in-kind tax charge for 2011-12.
• The Government is to provide a further £100 million to local authorities to repair the country’s potholed roads.
Look out for a more detailed analysis of the Budget later.