Gripped by the foot and mouth epidemic, farmers were told that from next month the duty will be scrapped on all farming vehicles which qualify for the special concessionary rate – a move expected to save the industry £10m a year.
Gordon Brown also announced his intention to encourage businesses to use more environmentally friendly cars.
He increased the two lower tax-free authorised mileage rates bands to 40p for the first 4,000 miles and 25p for further miles from next month. All other rates were frozen.
As proposed in the Pre-Budget Report, from April next year the current system will be replaced with a single tax-free rate of 40p per mile and 25p per mile for miles above the first 10,000.
Hauliers – in dispute with government last year over fuel prices – were also handed a boost after it was announced lower vehicle excise duty rates would be introduced in 2004 in line with European rates, and simplified rate bands would be brought in.
Additionally, a cash freeze on all road and non-road fuel duty was announced, alongside a 2p a litre reduction in the duty on ultra-low sulphur petrol and a 3p a litre reduction on low sulphur diesel.
An extension of the small car threshold for VED for cars registered before 1 March 2001 was also stretched from 1,200cc to 1,549cc.
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