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Summer Budget: new £140 a year road tax for green cars

Buyers of new 'green' cars will have to pay road tax, chancellor George Osborne has announced.

Summer Budget: new £140 a year road tax for green cars

Chancellor George Osborne has ennounced an overhaul of road tax that will see new 'green' cars subjected to a £140 duty.

From 2017, three new vehicle excise duty (VED), or road tax, bands will be created to catch expensive low carbon emission cars. Owners of the cars have previously been able to avoid the tax.

In his Budget speech Osborne argued it was unfair that people who could afford to buy new 'green' or low emission cars did not pay road tax while those who can only afford to buy less environmentally unfriendly cars had to pay the tax.

‘VED 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,’ he said.

‘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 VED. If you can only afford an older, second-hand car, you have to pay more tax.’

From 2017, three new VED bands will be introduced for new cars. While the cost of road tax will be set according to emissions, as today, the bands will be updated in line with new technology.

‘There will be three duty bands: zero emission, standard and premium,’ said Osborne. ‘For standard cars – that covers 95% of all cars sold in the UK – the charge will be £140 a year. That’s less than the average £166 that motorists pay today.

‘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.’

The chancellor also said that VED will once again return ‘to the use for which it was originally intended’ and be channelled into a ‘roads fund’ that will pay for upgrades.

‘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,’ he said.

2 comments so far. Why not have your say?

Dennis .

Jul 09, 2015 at 09:11

And the next step will be fuel duty on electricity used to charge electric cars.

report this


Jul 11, 2015 at 21:44

Good idea. At the moment the electricity is free at selected outlets.

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