Manheim comments on VED changes in 2015 Summer Budget
On Wednesday 8th July, the Chancellor of the Exchequer presented the Summer Budget to Parliament, which included significant changes to vehicle taxation from 2017. The government will introduce a new vehicle excise duty (VED) banding system for cars registered on or after 1st April 2017. The new system incorporates first year rates based on CO2 emissions, with a flat standard rate of £140 per year payable in subsequent years – except for zero-emission vehicles, for which no VED will be charged. In addition, cars with a list price above £40,000 will be subject to a supplement of £310 per year for the first 5 years in which the standard rate is paid.
Further detail on the new rates and bands from 2017 can be found on the government’s website: https://www.gov.uk/government/publications/summer-budget-2015/summer-budget-2015#transport-taxes
Michael Buxton, CEO of Manheim UK commented:
“As the VED changes announced by the Chancellor do not affect new vehicles until 2017, the changes should not impact the used vehicle market for the next two years. "
Once the first new vehicles affected by the changes enter the used market, the £310 supplement for cars with a list price of £40,000 or more when new could be a significant consideration for trade and private buyers.
"Premium, low emissions models that currently incur annual VED of £20 or £30 could see that leap to £450 per year. In fact, the annual VED bill for any car costing over £40,000 with CO2 emissions up to 185g/km will at least double from 2017, compared to current rates. Given the nature of the premium vehicle market, it is likely that the annual £310 supplement – payable for five years after the first year of registration – will not just affect the car's first owner, but in many cases its second and third owners, too.”