Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of raising the threshold for the vehicle excise duty surcharge in line with vehicle price increases since 2015.

The Vehicle Excise Duty surcharge is a supplement in addition to the standard rate of Vehicle Excise Duty, which is applied to cars with a list price of over £40,000. This surcharge is also known as the Expensive Car Supplement, and is payable for five years following the first registration of the vehicle, commencing in year two, with the final payment due in year six.

The £40,000 threshold was set as a suitable way of distinguishing the more luxury end of the new car market, meaning those who can afford the most expensive cars pay more than the standard rate paid by other drivers.

However, the Government recognises that transport is a major cost for individuals and families. That is why, at Spring Budget 2023, the Government announced it would maintain the rates of fuel duty at the levels set on 23 March 2022 for an additional 12 months, by extending the temporary 5p fuel duty cut and cancelling the planned inflation increase for 2023-24. That represents a saving of around £100 for the average car driver this year.

As with all taxes, the Government keeps the Expensive Car Supplement under review, and any changes will be announced at a future fiscal event.