The UK motor industry has slammed the Chancellor’s Budget move to bring in a new car tax system, warning that it risks damaging the UK’s burgeoning motor manufacturing sector and hitting its ability to meet carbon reduction targets.
A new vehicle excise duty (VED) banding system is to be introduced for cars registered on or after April 1, 2017.
Mike Hawes, chief executive of industry body SMMT (Society of Motor Manufacturers and Traders), said: “We recognise the current VED system needs to be reformed and highlighted this in a recent report.
“The Chancellor’s Budget announcement on the regime came as a surprise and is of considerable concern. While we are pleased that zero-emission cars will, on the whole, remain exempt from VED, the new regime will disincentivise take up of low-emission vehicles.
“New technologies such as plug-in hybrid, the fastest-growing ultra low emission vehicle segment, will not benefit from long-term VED incentive, threatening the ability of the UK and the UK automotive sector to meet ever stricter CO2 targets.
“The introduction of a surcharge on premium cars also risks undermining growth in UK manufacturing and exports. British-built premium cars are in increasing demand at home and globally, and the industry helps to support almost 800,000 jobs in the UK. Levelling a punitive tax on these vehicles will almost certainly impact domestic demand.”
First year rates will vary according to the vehicle’s CO2 emissions with a flat standard rate of £140 for all cars for subsequent years, except those emitting 0g/km of CO2, for which the standard rate will be £0.
Cars, including zero-emission cars, with a list price above £40,000 will be subject to a £310-per-year supplement for the first five years in which the standard rate is paid.
