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Three-year freeze VED and company car tax, 6 months' grace on fuel duty rise

Chancellor Gordon Brown's announcements yesterday included a three-year freeze of VED and company car tax at present levels, and a six-month freeze of fuel duties, while automated road use charging, planned initially for trucks, has been put off until 2008.

Petrol and diesel duty will rise 0.5p above inflation on 1 September by 1.9p/litre, but duty on sulphur-free fuel will rise by only 1.4p a litre in line with inflation. Fewer than 10% of motorists would have access to sulphur-free fuel on 1 September 1, but it's expected to be widely available by the end of the year.

As forewarned in the autumn's pre-budget statement, the duty discount for LPG will be reduced by 1p a litre for the next three years, affecting some 100,000 users of converted and dual-fuel petrol/LPG vehicles. The RMI's Matthew Carrington criticised the move as spelling the end for the 'green' fuel, and the forthcoming above-inflation increases in petrol and diesel, but the LPGA and Vauxhall treated the tapering-off of preferential treatment for LPG, along with the Government's review of company car taxation and environmental tax issues, as good news. The SMMT welcomed the freeze on company car tax as a help in maintaining market stability.

Bio-fuels will enjoy duty at 20p/litre below the rate applying to conventional fuels for three years; conversely, red diesel's duty advantage will be reduced, its price going up in Septermber by 2.42p/litre.

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