Last week on July 8th, Chancellor George Osborne announced his ever popular annual budget- the first of the new conservative government. And this time, there are some pretty big changes for motorists. From VED reforms to a new road fund, there’s a lot to take in. But what do these changes mean for the everyday driver?

We’ve cut through the jargon and compiled the following list of the key things you need to know about the Budget 2015…

An Overhaul to the VED System

Vehicle Excise Duty (VED) AKA Vehicle tax/car tax/road tax: A tax that must be paid on vehicles driven (or parked) on public roads in the UK.

For almost a decade, VED has been worked out using a calculation based on a car’s CO2 emissions and the model’s list price. Now though, as modern cars are being released with increasingly low emissions, they qualify for less road tax and in some cases non at all. It’s estimated that by 2016, three quarters of all new cars are set to qualify for zero VED, making the current system flawed and in need of a rethink.

Under the new changes, from 2017 any new vehicles will be taxed against one of three VED bands. These have been calculated in order to keep up with the falling CO2 emissions of modern cars:

Zero: Zero emissions- free road tax

Standard: A flat rate of £140 which will apply to 95% of cars on the road today (any cars with more than zero emissions and a list price less than £40,000)

Premium: £450 in total- the flat rate as well as a supplement of £310 per year for the first five years. This applies to any new vehicles with a list price over £40,000

These updates will be phased in from April 2017, and the changes will only apply to new vehicles registered after this date. Existing cars will continue to pay their current rate of road tax, and owners of electric cars won’t pay any road tax at all.

The Road Improvement Fund

Osborne has also announced a road improvement pot, which will be funded by the new VED car tax figures and pay for highway maintenance and repairs across the UK.

The chancellor has promised that from 2020-2021, the government will spend any revenue from the VED on the UK’s roads only. It makes sense that the tax we pay on our cars should go into looking after our roads, and we might finally see an end to those pesky pot holes!

What are your thoughts on these changes? Do you think they’re welcome updates to the system or are things better left alone? We’d love to know your thoughts! Join the conversation over on Twitter or Facebook…