Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will adjust the method of assessment for vehicle excise duty rates in the next fiscal year.

Vehicle Excise Duty (VED) is a tax on car ownership. The tax system encourages the uptake of cars with low carbon dioxide (CO2) emissions to help meet the UK’s legally binding climate change targets. Cars first registered between 1 March 2001 and 31 March 2017 pay VED annually according to CO2 emissions. From 1 April 2017, a reformed VED system was introduced for new cars. Under the reformed VED system, zero emission models currently pay nothing on first registration, whilst the most polluting pay over £2,600. In subsequent years, most cars move to a standard rate, currently set at an annual rate of £190. However from April 2025, electric cars will begin to pay VED in the same way as petrol and diesel vehicles, whilst an incentive is maintained for electric cars at the point of purchase.

Revenue from motoring taxes helps ensure we can continue to fund the vital public services and infrastructure that people and families across the UK expect. The Government annually reviews the rates and thresholds of taxes and reliefs to ensure that they are appropriate and reflect the current state of the economy. As with all taxes, the Government welcomes representations from the public on how the tax system can be improved.

Following the spending audit, the Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and address the £22 billion hole the government has inherited. Decisions on how to do that will be taken at the Budget in the round.