Chancellor Gordon Brown has today announced the restoration from April 2006 of the company car tax diesel supplement on new diesel cars registered from January 2006, to reflect the mandatory introduction of new Euro IV emissions standards.

Also, the Government has plans to align the VAT fuel scale charge with the company car benefit charge to provide "consistent" tax incentives for less polluting cars, subject to informal consultation with businesses.

Brown also, as expected, announced a freeze on fuel duty.

In his pre-Budget speech to the House of Commons he said that while Government policy is to raise fuel duty at least in line with inflation each year to fulfil environmental commitments, this financial year duty would be frozen. The reason was the ‘volatility in the oil market’.

It means a year free from duty rises - although prices at the pump have increased due to other worldwide trends.