Vehicle Excise Duty (VED)
Since 2001, VED has been based on different rates depending on
carbon dioxide emissions from cars. The Government announced
further reforms of vehicle excise duty in the 2008 Budget to
encourage the purchase and manufacture of more fuel efficient
cars. These included an increase in the number of VED bands from
seven to thirteen from 1 May 2009. These new bands reflect
the changes in the fuel efficiency of vehicles and also provide a
greater incentive for drivers to choose a lower-carbon version
of car within their preferred class, whether purchasing in the new
or second-hand market
| VED Band | CO2 Emissions (g/km) |
Standard Rates 2009-10
|
Standard Rates 2010-11
|
First Year Rates 2010-11
|
|
A
| Up to 100 |
£0
|
£0
|
£0
|
|
B
| 101-110 |
£35
|
£20
|
£0
|
|
C
| 111-120 |
£35
|
£30
|
£0
|
|
D
| 121-130 |
£120
|
£90
|
£0
|
|
E
| 131-140 |
£120
|
£110
|
£110
|
|
F
| 141-150 |
£125
|
£125
|
£125
|
|
G
| 151-165 |
£150
|
£155
|
£155
|
|
H
| 166-175 |
£175
|
£180
|
£250
|
|
I
| 176-185 |
£175
|
£200
|
£300
|
|
J
| 186-200 |
£215
|
£235
|
£425
|
|
K
| 201-225 |
£215
|
£245
|
£550
|
|
L
| 226-255 |
£405
|
£425
|
£750
|
|
M
| Over 255 |
£405
|
£435
|
£950
|
New Capital Allowances System
From 1 May 2009, the rules surrounding tax relief will become
more closely aligned to the CO2 emissions of the vehicle, rather than the vehicle price. These changes aim to encourage car
manufacturers and business purchasers to reduce the impact of
business travel on the environment.
The new system for qualifying expenditure incurred on cars on or
after 1 May is summarised as follows:
|
CO2 Emissions
|
Capital Allowances Available
|
|
110g/km or less
|
100 per cent first year allowance (if car is new)
|
|
111 - 160g/km
|
Expenditure goes into the main plant and machinery pool
(unless there is a private use) with a Writing Down Allowance
of 20 per cent per annum.
|
|
Over 161g/km
|
Expenditure goes into a special rate pool (unless there is a
private use) with a Writing Down Allowance of 10 per cent
per annum.
|