HISTORIC PRESS RELEASE : Graduated Vehicle Excise Duty System for New Cars [September 1999]

The press release issued by HM Treasury on 8 September 1999.

As announced in the Budget, work is getting underway to introduce a Graduated Vehicle Excise Duty (VED) system for new cars based primarily on their emissions of the greenhouse gas carbon dioxide.

The Driver and Vehicle Licensing Agency (DVLA) will shortly be opening technical discussions with a range of bodies so that the environmental information upon which the new system is to be based can be collected when a new car is registered and then used in the new VED system.

As announced by the Chancellor in his March Budget, the system will apply to cars first registered from Autumn 2000, and will be introduced on a revenue neutral basis. It forms part of the Government’s effort to encourage motorists and manufacturers to buy and make greener vehicles.

As the Government proposed in a consultation document last November, there will be four VED rate bands according to their rate of emission of carbon dioxide — which is linked directly to fuel efficiency — with the potential for example to reward less-polluting fuels.

Cars first registered before the new system is introduced will continue to be taxed under the existing engine size-based system.

Details of the scheme will be announced in next year’s Budget in advance of the system’s introduction.