Two-thirds of new cars exempt from VED 18 Jul 2014

Green cars drive down Chancellor's VED income

Almost 1.4 million new cars registered in Great Britain in 2013 were exempt from Vehicle Excise Duty (VED) in their first year on the road.

This is almost two-thirds (63%) of the total of 2.2 million new cars registered.

The cars were exempt from VED because they emitted less than 131gCO2/km and fell into VED bands A-D.

In the first year on the road any vehicle that meets this target is zero rated for VED.

Things change from year two onwards when only those vehicles emitting less than 101gCO2/km (Band A) are completely exempt from VED.

However this still means that - assuming the rules stay the same - 324,000 cars bought last year will never be liable for VED.

This is a table of the VED bands and registration figures for each band for 2013. (For the 2014/15 VED bandings and charges see notes to editors.)

VED Band

CO2 Emissions

Cars registered in 2013

A

Up to 100g/km

324,000

B

101-110g/km

272,000

C

111-120g/km

430,000

D

121-130g/km

370,000

E

131-140g/km

301,000

F

141-150g/km

182,000

G

151-165g/km

153,000

H

166-175g/km

63,000

I

176-185g/km

33,000

J

186-200g/km

35,000

K

201-225g/km

18,000

L

226-255g/km

20,000

M

Over 255g/km

10,000

TOTAL

 

2.2 million

Note: Some of the numbers in this table have been rounded. There were also a small number of ‘unknown’ vehicles which did not fit into any band.

Professor Stephen Glaister, director of the RAC Foundation, said:

“These figures are astonishing. It shows just what progress car manufacturers are making in terms of cutting carbon emissions and the appetite amongst buyers to reduce running costs.

“By buying the most fuel efficient cars people save money at the pumps, save money on vehicle excise duty and help cut carbon emissions.

“With all the emphasis on electric cars it is easy to forget just how much progress is being made in cleaning up the car fleet through the use of hybrid technology, and the leanest petrol and diesel engines.

“Take up of zero emission vehicles is a slow burn but these figures demonstrate we are already making significant progress in reducing CO2 emissions through the use of more conventional technology.

“The question is: can motorists keep buying the most environmentally-friendly cars confident that the low levels of tax will continue? The Chancellor is faced with rapidly declining levels of VED income because of drivers’ green choices and it is hard to imagine him foregoing the cash for long.”

In Budget 2012 Mr Osborne said the government would “consider whether to reform VED over the medium term to ensure that all motorists continue to make a fair contribution to the sustainability of the public finances, and to reflect continuing improvements in vehicle fuel efficiency”. But in Budget 2013 the policy had changed with the government saying it had “no plans to make significant reforms to the structure of VED for cars and vans in this Parliament”.

ENDS

Contact:

Philip Gomm – Head of External Communications

020 7747 3445 | 07711 776448 | 020 7389 0601 (ISDN)

Notes to editors:

The RAC Foundation is a transport policy and research organisation that explores the economic, mobility, safety and environmental issues relating to roads and their users. The Foundation publishes independent and authoritative research with which it promotes informed debate and advocates policy in the interest of the responsible motorist. The RAC Foundation is a registered charity, number 1002705.

House of Commons briefing paper on VED:

http://www.parliament.uk/briefing-papers/SN01482/roads-vehicle-excise-duty-ved

Registration figures are available here:

https://www.gov.uk/government/statistical-data-sets/veh02-licensed-cars

VED bands and rates for 2014/15

VED Band

CO2 Emissions

First year rate

Standard rate

 

A

Up to 100g/km

£0

£0

 

B

101-110g/km

£0

£20

 

C

111-120g/km

£0

£30

 

D

121-130g/km

£0

£110

 

E

131-140g/km

£130

£130

 

F

141-150g/km

£145

£145

 

G

151-165g/km

£180

£180

 

H

166-175g/km

£290

£205

 

I

176-185g/km

£345

£225

 

J

186-200g/km

£485

£265

 

K

201-225g/km

£635

£285

 

L

226-255g/km

£860

£485

 

M

Over 255g/km

£1,090

£500

 

 

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