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Budget: Motoring

COMPANY CAR drivers have learnt over the past few years that their vehicles are less of a perk than they once might have been. This week, the Chancellor told them that they stand to pay even more.

Mr Brown announced that while the tax charge, at 35 per cent of the list price of a company car, will continue to reduce depending on the number of miles driven, it will not reduce as sharply.

Henceforth, it will fall to 25 per cent if the car is driven between 2,500 miles and 17,999 miles a year for business travel and down to 15 per cent if the mileage is above 18,000.

The biggest hit is on petrol duty, up 6 per cent above inflation, or 3.79p a litre, pushing the price of a gallon of unleaded fuel above pounds 3 for the first time. Unleaded fuel will rise faster, by 4.25p to 74.4p, while diesel will jump 6.14p to 71p.

This was combined with measures aimed at encouraging the use of smaller cars. Vehicle excise duty will drop from pounds 150 to pounds 100 for cars with engines smaller than 1,100 cc, while rising pounds 5 for others.

Andrew Verity