The changes in Vehicle Excise Duty (VED) confirmed in March’s spring budget came into effect on 1 April.

Under the rules, new car buyers will pay a minimum of £140 a year in VED. In the first year from purchase, the amount will vary by carbon dioxide emission levels, before switching to the standard rate of £140. Cars worth over £40,000 will be subject to a £310 supplement for three years.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

The changes came into effect after months of warnings on potential negative impacts from industry bodies such as the BVRLA, which claimed it could damage both the new car industry and the environment.

Matt Sutherland, chief operating officer of Alphabet, warned that the rise in VED, in conjunction with delayed lower BiK rates for ULEVs would also slow down the take up of low emission vehicles among fleets.

He said: “It is disappointing…VED rates for cars registered after 2017 may also provide a disincentive for the take up of ULEVs.”

BVRLA chief executive Garry Keaney said: “The VED changes will slow the rate at which these cleaner cars are brought on fleet and subsequently sold in the second-hand market.”

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The RCA Dealer Network said that the rise in VED could lead to a boost of innovation in the used car industry. Sean Kent, director, corporate and independent dealers at the RAC Dealer Network claimed that the rise in VED could help the used car industry entice at lower end of the new car market.

Kent said: “Some new superminis and family hatches will see the amount of VED paid rise exponentially, by as much as nine times over the first three years if their life.

“We believe this is a great opportunity for used car dealers to position themselves as an alternative, highlighting the way in which VED is hitting new cars and the increasingly good value that used cars represent as an alternative.”