Tax cuts don’t add up for motorists

01st December 2008

Alistair Darling’s pre-Budget tax tinkering won’t save motorists enough cash for a tank of fuel! We’ve done the maths, and the 13-month VAT cut will save the average driver a mere £35 – as the 2p per litre of petrol drop in sales tax has been countered by a 2p rise in fuel duty.

We worked out the running costs for a Ford Focus 1.6 petrol over 12,000 miles. As our table shows, the only real saving comes when buying the car new – our £15,545 Focus would cost £330 less.

But the price of a year’s tax is set to go up by £5, while fuel duty will rise in April and again in January 2010. With the return of the 17.5 per cent VAT rate, that will add at least 5p to each litre of petrol.

VAT’s the way: How Chancellor’s rate cut will affect the average driver’s bills
   
Model / Pre-Budget (Nov 2008) / Post-Budget (Dec 2008) / Saving?
 
Focus Zetec 1.6 / £15,545 / £15,214 / £331
Set of tyres / £596 / £566 / £30
Service / £90 / £85 / £5
Brake pads / £38 / £35 / £3
MoT / £40 / £38 / £2
Fuel for 12,000 miles / £1,202 / £1,202 / £0
12 months’ car tax / £145 / £150 / -£5
Total / £17,656 / £17,290 / £366