Chancellor Alistair Darling confirms details of car buying incentives

Chancellor Alistair Darling has confirmed that the UK will get a car scrappage scheme from next month.

The UK car industry has put considerable pressure on the government to introduce a scheme to encourage new car purchases and help support UK dealers and manufacturers.

Scrappage 'compromise' attacked

Citroen commits to scrappage

Scrappage 'bad for premium cars'

Scrappage details may change

Scrappage scheme reaction

Blog - Scrappage: it's £1k, not £2k

Blog - German makers scrap over scrappage

The chancellor announced that when a car more than 10 years old is scrapped the government will offer a £2000 discount on a new car.

There will be £300 million of funding put into the scheme, which will run from mid-May until March 2010, or until the government funding has been used.

However, the scheme's incentive will be split between the government, which will provide £1000, and the car industry, which will pay the other £1000. As a result, car manufacturers must sign up to be part of the scheme and they are not obliged to take part.

Dealers of participating manufacturers will be required to do all the paperwork for the car buyer, and arrange for the old vehicle to be scrapped.

The old vehicle being scrapped must be a passenger car or small van up to 3.5 tonnes, registered in the UK on or before 31 July 1999, currently registered with the DVLA to a UK-domiciled registered keeper making the application or on a SORN notice, have a current MOT test certificate, and have been continuously registered to the owner for the 12 months precedeing the purchase.

The new vehicle must be a passenger car or small van up to 3.5 tonnes, first registered in the UK on or after the date the scrappage scheme is launched and be the first registration for the car, be a UK-specification car and registered to the same registered keeper as the vehicle being scrapped.

There will be no C02 restrictions on the new cars in order to help sales of cars from luxury manufacturers – particularly Jaguar Land Rover - and the scheme is scheduled to close in March 2010.

The path towards the scrappage discount has been tortuous, with widely reported disputes between business secretary Lord Mandelson, who has been vocal in his support for such a scheme, and the treasury, which has been desperately looking for ways to cut spending.

Later in his budget, the chancellor announced that fuel duty would increase by 2p a litre in September and by 1p a litre in real terms each year from 2010 to 2013.

He also announced Vehicle Excise Duty road tax 2009/10 rate changes will take effect from 1 May, 2009 and that the first year VED rate as announced in November’s pre-Budget report will take effect in 2010/11.

There will also be changes in company car benefit-in-kind tax from 6 April, 2011. These will result in:

- the CO2 emissions thresholds for main company car tax bands being shifted down by 5g/km.

- the £80,000 cap on company car list prices for the purposes of calculating company car benefit being abolished so that all company car drivers pay a fair rate.

- discounts for early-uptake Euro 4 standard diesel cars, higher-emitting hybrid vehicles, gas-powered and biofuel-capable cars will be abolished, in favour of a system that simply rewards lower tailpipe CO2 emissions.

Add your comment

Log in or register to post comments

Find an Autocar car review

Driven this week

  • Skoda-Karoq 2.0 TDI 4x4
    First Drive
    16 October 2017
    Diesel version of Skoda’s junior SUV is unobtrusive and undemanding, but we’d still go for the silkier petrol version of the Karoq
  • Audi Q7 e-tron
    First Drive
    16 October 2017
    Expensive and flawed but this understated diesel-electric Audi Q7 has a lot to offer
  • Citroën C3
    First Drive
    16 October 2017
    Is the third gen Citroën C3 ‘fresh and different’ enough to take on its supermini rivals? We spend six months with one to find out
  • BMW X3
    First Drive
    15 October 2017
    A satisfying rework of the X3 that usefully improves its handling, cabin finish, space and connectivity to make this BMW a class front-runner again
  • Vauxhall Insignia Country Tourer
    First Drive
    13 October 2017
    Off-road estate is now bigger, more spacious and available with torque-vectoring all-wheel drive, but is it enough to make its German rivals anxious?