HISTORIC PRESS RELEASE : Size Matters – Less Tax on Smaller Cars from Today [May 1999]

The press release issued by HM Treasury on 31 May 1999.

Own a small car? Or thinking of buying one? This may help – from today, the Vehicle Excise Duty (VED) on vehicles with an engine of 1100cc or less is cut to £100 – a saving of £55.

1.8 million cars in the UK will benefit from the reduced rate, said Economic Secretary Patricia Hewitt today:

“Size obviously does matter – and those people with smaller, cleaner cars will from today reap the benefit of a significant cut in VED.

“Safeguarding the environment and protecting people’s health is a major commitment of this Government – and using the tax system to encourage people to use environmentally-friendly cars is one way to do this.

“Today’s cut is only the first step in a major reform of the VED system. From autumn 2000, a completely new system will be introduced for new cars, where owners will pay according to their car’s rate of CO2 emissions. This Government is sending a clear and strong environmental signal to motor manufacturers and owners alike that measures will be taken to protect the environment.”

NOTES TO EDITORS

1. In the 1998 Budget, the Chancellor promised to introduce a system of graduated VED for cars, to encourage people to manufacture, use and buy more fuel-efficient vehicles. Today’s reduced rate is the first step of that commitment. A graduated VED system for new cars based primarily on their carbon dioxide emissions will apply from autumn 2000.

2. The models of cars that will qualify for the reduced rate include:

• the lowest engined-sized models of the Vauxhall Corsa, Volkswagon Polo, Volkswagon Lupo, Nissan Micra, Fiat Seicento, Toyota Yaris, Suzuki Alto, Suzuki Swift, Suzuki Wagon R, Daihatsu Cuore, Daihatsu Move, Daihatsu Sirion, Hyundai Atoz, Daewoo Matiz, Seat Arose, Perodua Nippa and Citroen Saxo.
• There will also be a number of older models of Minis, Ford Fiesta Populars, Metros, Fiat Pandas, Fiat Unos, Citroen AX and Peugeot 106 that will qualify.

3. Around 8 per cent of all the cars in the Private and Light Goods vehicle class have engines up to 1100cc – around 1.8 million cars will therefore be eligible for the £55 reduction.

4. The DVLA have written to motorists who will benefit from the lower rate inviting them to relicence at the reduced rate from today and (where appropriate) claim a refund on their current licence. The Post Office will deduct the refund due on their current licence from the cost of their new one.