Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, with reference to the Driver and Vehicle Licensing Agency's VED reform, due to commence on 1 April 2017, what estimate he has made of how many and what proportion of zero emission vehicles have a list price (a) of £40,000 and under and (b) over £40,000; and for what reasons the threshold was set by the Government at £40,000.

Data is not available about list prices for cars registered in the pre-2017 VED system. As a proxy, data can be used from the Government’s Plug-in Car Grant scheme, which provides a discount to purchasers of eligible ultra-low emission cars. The value of the grant varies according to factors including the vehicle’s zero emission mileage capability. In the year to November 2016, 23% of all grants of the highest category available (i.e. cars with below 50g/km of carbon dioxide (CO₂) and a zero emission range of at least 70 miles) were in respect of cars priced over £40,000. Out of all grants made since the scheme began, 14% of grants in the highest category were in respect of cars priced over £40,000.

Ahead of the announcement of the VED reforms at Summer Budget 2015, Ministers reviewed data from 2014 that showed 95% of car sales were below £40k. Ministers considered that this was a fair threshold for an additional rate of VED which would apply to consumers who are able to afford a supplement.