Summer Budget 2015: New Vehicle Excise Duty rates

Summer Budget 2015: new Vehicle Excise Duty rates

The government is to introduce new Vehicle Excise Duty (VED) bands for new cars from April 2017 in order to create a new fund to pay for road-building.

By 2020-21, the government says it aims to have spent over £28 billion in "enhancements and maintenance" of national and local roads.

But in order to meet that funding commitment, chancellor George Osborne announced in his Summer Budget speech that the government needs to reform VED for new cars registered from April 2017.

But there will be a lag before the revenue from the new VED bands actually reaches the new Roads Fund – only from 2020-21 will all revenue raised be invested directly into road-building and maintenance via the Fund.

During the first year, a sliding scale of VED applies to new cars, from £0 for cars with no emissions, rising to £10 at 1-50 gCO2/km, £25 at 51-75 gCO2/km all the way up to £2,000 for new cars with over 255 gCO2/km.

After the first year a standard rate will kick in at £140 a year, unless the car emits zero grams of carbon dioxide per kilometre (gCO2/km), in which case there will again be no charge.

Owners of more expensive new cars – with a list price above £40,000 – must also have to fork out an extra £310 a year for the first five years.

Osborne said: "We need a long term solution if we're going to fix Britain's poor roads. Vehicle Excise Duty was used to fund our roads, but not anymore. And because so many new cars now fall into the low carbon emission bands, by 2017, over three quarters of new cars will pay no VED at all in the first year.

"This isn't sustainable and it isn't fair. If you can afford a brand new car, including some of the most expensive models available, you can pay no VED. If you can only afford an older, second-hand car, you have to pay more tax.

"There will be no change to VED for existing cars - no one will pay more in tax than they do today for the car they already own.

"In total we'll only raise the same amount of revenue from VED in the future that we do today – but that revenue will be secure for the long term."


Your Comments

So another tax break for the rich - instead of paying £200-2000 for their expensive cars only they can probably afford those on the less damaging scale has to pay more to give them a cut. Surely someone with a low emission such as the current scale up to £140 should have a lower charge than someone pumping out 2-5x as much pollutants. This is in no way an overhaul - the current system is fairer! This is just standard Tory grabbing from the rich to give to the poor thinking!

There are virtually no zero emission vehicles, per se. Electrically-powered vehicles will have their batteries charged up from the Grid - and there are still power stations that burn fossil fuels, and hence create their own greenhouse gas emissions that have to be reflected into the operation of the 'zero-emission vehicles'.

I sense another U Turn. This is the most stupid change in VED ever.
Mr Chancellor, you will loose revenue as the most polluting cars will not be sold new, but 1 year after they are registered. A paperwork fiddle...
Environment & Green Party - you will loose (hope and) the reduction in CO2 emissions / target  we have signed up to.
You & I - we will have to pay £140 VED, whereas today we shop around for £0 VED and an environmentally friendly car.
Now we have no incentive to go green.

More double speak language. "There wil be no change to the VED for existing cars"   " No more tax for the car they now own"   Not the same thing, Which is it ???  


They are the same thing.... The wording means No more tax for the car they own now THAN THE RATES THEY ALREADY PAY.
Existing cars will continue to pay the VED via the current system, even after April 2017.  Only new cars registered after April 2017 will pay the new VED rates.  Don't think it's any more complicated than that really - it isn't saying existing owners will not pay any more VED at all.

Still screws people over when they get a new car and costs people who buy expensive poluting cars (ie. the 1%) less than they pay now - it's ridiculous - the system works fine as it is!