Vehicle Excise Duty

16 Jul Vehicle Excise Duty

Major changes to the way Vehicle Excise Duty (VED) is calculated and spent will come into effect from 2017. In his Budget speech, the Chancellor confirmed that the success of low emission cars is having an adverse effect on the amount of money raised from VED.

He stated that '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.'

To combat this issue, three new bands of VED will be introduced for brand new cars from 2017, zero emission, standard and premium. Existing cars already on the road will not be affected by the changes. The standard rate which will apply to most new cars will be £140, less than the average paid by motorists today.

The Chancellor also committed to spend the money raised from road tax in England on England’s roads from 2020. In addition, the Government will extend the deadline for the first MOT of new cars and motorcycles from 3 years to 4 years.

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