Fleet News

Budget: VED reform not in tune with carbon cutting philosophy

John Pryor, ACFO

Reform of Vehicle Excise Duty was always a possibility as it was obvious that under the current system government revenue would decline as more low emission and ultra-low emission cars were purchased.

The changes to first year VED rates are therefore understandable as they continue to incentivise the uptake of the ‘cleanest’ cars from an emission standpoint.

However, the standard rate for all cars, with the exception of zero emission models and those with a list price above £40,000, is less easily understood.

Successive government has remained focused on driving down vehicle emissions and improving air quality. Therefore, a standard rate of VED during a vehicle’s lifetime except in the first year of ownership appears not to be in tune with such a philosophy.

ACFO believes that it is equally important to encourage second owners to drive low emission cars and therefore would favour a graduated standard rate of VED.

Increasing Insurance Premium Tax from 6% to 9.5% - a rise of more than 50% - seems to be extremely penal in respect of vehicle insurance, which is a legal requirement.

Unlike some other insurance policies, where consumers have a choice as to whether they opt for insurance or not, the law dictates that all vehicles must be insured.

ACFO fears that such an iniquitous increase in respect of vehicle insurance could herald a rise in the number of uninsured drivers on the UK roads.

It also places an increased onus on fleet decision-makers to ensure that employees who drive their own cars on business trips are suitably insured for the purpose.


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