Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, whether he plans for the Vehicle Excise Duty premium rate proposed in the Summer Budget 2015 to apply to (a) zero and (b) low emission vehicles.

The updated CO₂ banding in first year rates in the new VED system strengthens the incentive to purchase the cleanest cars including hybrid and plug-in vehicles. Hybrid and plug-in vehicles will also continue to be supported by beneficial rates of Company Car Tax.

The premium car supplement will apply to all cars with a list price above £40,000, including zero and low emission vehicles. The supplement applies for the first five years in which the standard rate is paid. Zero-emission cars with a list price below £40,000 will pay no VED for the lifetime of the car.

The new VED system is not expected to have significant effects on the second-hand car market for zero- or low-emission cars. The reformed VED system will apply to cars first registered from 1 April 2017, so cars in the new system are unlikely to enter the second-hand car market in large numbers until the 2020’s.