Sinclair Finance & Leasing: Budget 2008: Vehicle Excise Duty changes

With the latest budget comes a reform of the Vehicle Excise Duty (VED) structure. 2009 will see a restructure where financial incentives are offered for those choosing the greenest cars, while from 2010 in order to deter people from buying the high emitting vehicle, there will be a new higher first year rate.

This will mean that cars emitting less than 130g/km of CO2 will pay no VED in the first year, but cars that produce more than 254g/km will pay a first year VED of £950.

This new reform was infact based on Professor Julia King's review of low carbon cars - he found that by switching to the greenest cars on offer, motorists could save 25% of their fuel costs. The chancellor stated: "It is right that if poeple choose to buy a more polluting car that they should pay more in the first year to reflect the environmental cost"

The changes are:

six new VED bands from 2009-10 - including a new top band (band M) for most polluting cars that emit more than 255g CO2/km;
reducing the standard rate, in 2009-10, for all new and existing cars that emit 150g of CO2/km or less;
and increasing the rate on the most polluting cars to £425;
from 2010-11, extending the zero rate of VED, during first year of ownership, to all new cars that emit 130g CO2/km or less;
holding the first year rate for all new cars that emit between 131 to 160g CO2/km equal to the standard rate in 2010-11;
for the most polluting cars a first year rate of £950 in 2010-11

The chancellor stated that the majority of motorists are better or no worse off as a result of these changes - The question is do the public agree? - please comment