Budget 2003: fall in VED – for just 220 drivers

JUST 220 drivers will benefit from a new low rate of vehicle excise duty (VED) introduced in last week's Budget.

Chancellor of the Exchequer Gordon Brown announced a new AAA band, to slot in below the recently introduced AA band, for ultra-low emission vehicles.

However, the new band covers vehicles with carbon dioxide emissions up to 100g/km and the only car on sale to fall into this category is no longer being imported to the UK by its manufacturer.

The Honda Insight petrol-electric hybrid has carbon dioxide emissions of 80g/km and the company has admitted that while it is still technically on sale, there is limited stock with marketing efforts being re-focused on the new Civic IMA.

The Insight coupe is a two-seater coupe, which was launched in the UK in 2000 and was the first hybrid to go on sale in this country. As an alternative fuel vehicle it will qualify for VED at £55 a year from May 1.

However, Honda is now introducing a hybrid based on the Civic, the IMA, which will be a five-seat saloon giving it broader appeal and it will be less expensive to buy than the Insight. A spokesman for Honda said: 'The new tax band will make very little difference to us, but I'm sure the 220 existing Insight customers will be delighted.'

A petrol car in the AAA band would incur a charge of £65 a year and a diesel car would cost £75 a year, but none are available in the UK. The next 'cleanest' diesels are the Citroen C3 1.4 HDi and Renault Clio dCi at 110g/km, while the next best petrol vehicle is the smart City Coupe at 113g/km.

Audi and Volkswagen produce cars which emit less than 100g/km of CO2 (the Audi A2 1.2 TDI and Volkswagen Lupo 1.2 TDI), but neither manufacturer has plans to bring them to the UK, despite the lower VED rate. Meanwhile, existing VED charges were increased by £5, which Brown said was in line with inflation.

Graduated VED annual rates for vehicles registered on or after March 1, 2001. Effective May 1,2003
VED band	CO2 (g/km)	Alt fuels	Petrol	Diesel
AAA	Up to 100	£55	£65	£75
AA	101 to 120	£65	£75	£85
A	121 to 150	£95	£105	£115
B	151 to 165	£115	£125	£135
C	166 to 185	£135	£145	£155
D	186 and above	£155	£160	£165