The new first year rate of vehicle excise duty (VED), aka showroom tax, will target all new vehicles for the first year of registration based on their CO2 emissions. Cars that emit less than 130 g of CO2/km will be exempted from VED charges for the first year. The tax starts at 110 pounds, a level that applies to cars emitting between 131 and 140 g of CO2/km and climbs up to 950 pounds for vehicles that emit over 255 g of CO2/km. The first year rate of VED will be paid at the acquisition of the car, with the same amount to be paid for every following year.
The only cars that benefit from the new tax system are the ones emitting between 121 and 130 g of CO2/km, for which owners will have to pay 120 pounds less/year, as compared to the previous rate. Based on the figures posted in the UK last year, this applies to 7.2 percent of new cars.
The most dramatic change can be found at the upper end of the market, but the authorities claim that this will affect very few people, as the segment only accounts for 1.5 percent of new car sales.
“We are disappointed that government didn’t take the opportunity in last week’s Budget to defer the introduction of the first year rate or the increase in standard VED rates. Environmental taxes need to be clear and consistent so that motorists can be confident that they will reap the benefits from their decision.”, said Paul Everitt, Chief of the Society of Motor Manufacturers and Traders.
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