2016 Budget: How It Affects Motorists

Thursday 24th March 2016

This year’s budget offered a welcome surprise for motorists as the Chancellor announced a freeze on fuel duty alongside proposed improvements to the UK road infrastructure.

A small increase in insurance premiums and a planned increase in company car tax bands will hit some drivers but it wasn’t all bad news.

We take a look at what the 2016 budget means for Zi Car and Van Hire customers:


Fuel Duty

A much needed boost for motorists came in the form of a freeze in fuel duty for the sixth consecutive year. The Treasury claims it will save the average UK driver £75 per year, and the average van driver £200 per year.

Osborne said the tax cut is worth nearly £7 billion a year and was quoted as saying ‘I know that fuel costs still make up a significant part of household budgets and weigh heavily on small firms. Families paid the cost when oil prices rocketed, they shouldn’t be penalised when oil prices fall.’


fuel prices

Road investment

Major plans to the UK’s road infrastructure have been confirmed with the Government forging ahead with its ‘Roads Investment Strategy’.

Plans are underway to increase investment in the transport network to £61 billion until 2021 and we are likely to hear soon about a second strategy which will run until 2025.

Funding has been earmarked for several projects including:

The upgrade of the M62 to a four-lane motorway.

Developing road connections from the East to the West of the country. Plans are underway for a new tunnel under the Peak District, connecting Sheffield and Manchester and improvements to the A66, A69 and M60.

Improvements to the M1 – Rotherham to Wakefield.

An additional £151 million will be distributed to local transport projects including £50 million to repair potholes around the country.


Company Car Tax

It wasn’t great news for company car drivers as the Government confirmed a planned 2% increase in company car tax bands from 2017. The British Vehicle Rental and Leasing Association claims the increase will cost the average company car driver an additional £626.94 in 2017-18, and £882.26 in 2018-19.

The Government also announced it is deferring plans to scrap the three percentage point differential between diesel and petrol cars until April 2021.


company car tax



The UK’s 26 million drivers will be hit by a 0.5% increase in car insurance premiums from October. It’s not as bad as the proposed 3% increase but it still means the average comprehensive motor insurance policy will increase by £2.

A snapshot of the 2016 budget:

  • Fuel duty frozen for sixth consecutive year saving car drivers on average £75
  • Small business van driver saves £250 per year thanks to fuel duty freeze
  • Insurance premium tax up by 0.5%
  • Trials of driverless cars approved for 2017
  • New tunnel road under the Peak District from Sheffield to Manchester
  • Petrol price comparison digital boards trialled on M5 near Bristol
  • Plans to expand M62 to four lanes
  • A66, A69 and M60 improvements
  • Toll charges on the Severn crossing from England to Wales halved by 2018
  • £50 million earmarked for pothole repairs
  • £130m repair fund for roads/bridges damaged by storms
  • Company car tax will be based on CO2 until at least 2021
  • Businesses encouraged to buy low-emissions cars, with 100% First Year Allowance (FYA) extended until April 2021


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