The Chancellor has announced some changes to VED. 95 per cent of cars will be charged less than the average under the current regime; the scheme will deliver money to improve our roads; and won’t affect existing cars.
From 2017, for brand-new cars only, the duty will be set according to emissions, like today, but updated for new technology. When buying a new car, there will be three duty bands: zero emission, standard and premium. 95 per cent of cars sold in the UK will be rated standard, and charged £140 a year. That is less than the average £166 that motorists pay today, which I know will be welcome.
In addition, money raised under the new scheme will now be ring-fenced for spending on roads. From the end of this decade, every single penny raised in VED in England will go into that fund to pay for the sustained investment our roads so badly need. Tax paid on people’s cars will be used to improve the roads that they drive on, improving the infrastructure and productivity of our economy.
Finally, as these changes take place from April 2017, and will only affect brand-new cars, existing cars, including ones currently in the process of being bought, will continue to be taxed under the existing VED scheme. This is a fair approach. It doesn’t move the goalposts for existing cars, but addresses the fundamental unfairness of the VED scheme set up by Labour, whereby if someone can afford a brand new car they can potentially pay no VED, whereas if they can afford only an older, second-hand car, they have to pay more tax.
By Patrick McLoughlin on October 27, 2015