PracticeConsultingVehicle relief ploughed back to farmers

Vehicle relief ploughed back to farmers

The crisis-hit farming industry received some respite in the Budget today when it was announced the vehicle excise duty on tractors and agricultural vehicles is to be abolished.

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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