Proposal buried in the Budget would see huge hikes in car tax for some drivers...

[dutchman]

Motorists could be stung with significantly higher car tax after the government suggested it could bring it back in line with C02 emissions to hit owners of the dirtiest models hardest



A call for evidence on Vehicle and Excise Duty, buried deep in today's Budget document, has criticised the decision in 2017 to introduce a flat-rate tax for all new cars bought after 1 April 2017.

The paper, which is not policy yet, suggests a potential U-turn and return to a system where car tax charges directly relate to CO2 outputs in an effort to encourage buyers to choose lower emission cars.

One of the proposals in it would see the most polluting cars incur the same rate of car tax every year as they currently do in their first one, which could hit owners for £2,000-plus annually.

Drivers would have welcomed most of the announcements made by chancellor Rishi Sunak in his first Budget statement on Wednesday afternoon.

These included the extension to the freeze on fuel duty for a tenth year and availability of the Plug-In Car Grant for electric cars for the next three years.

And there was also confirmation of increased funds for EV rapid chargers, the 'biggest ever investment for strategic roads' and more money to fill potholes for local councils.

But nestled in the depths of the Budget document was a new consultation that could see annual car tax costs rocket for some drivers.

The Treasury paper confirmed the 'publication of a call for evidence on VED, which will include how it can be further used to reduce vehicle emissions'.

This call for evidence criticises the decision taken in 2017 to introduce a flat standard rate for VED paid from the second year for all new cars.

Under these rules, first year car tax is currently based on how much carbon dioxide your vehicle produces.

This increased to £145 on 1 April 2019.

That means a 5.0-litre V8 Ford Mustang costs the same to tax every year from the second year onwards as a Toyota Prius hybrid.

Only zero-emission electric vehicles are exempt from both first-year and standard-rate VED under the current rules.

But the consultation paper has slammed this flat rate, claiming it has 'weakened the link between VED liabilities and carbon emissions after a vehicle is first registered'.

It is now looking for ways to reinstate measures where the amount you pay in car tax from the second year directly correlates to how clean or dirty a car is.

It suggests this U-turn could be backdated, so would impact buyers of new cars since 1 April 2017.

One of the recommendations provided in the document is to make each annual road tax payment the same as a vehicle’s first-year rate.

Currently, the highest amount paid in the first year is for owners of cars that produce 255g/km of CO2 or more, which costs £2,135.

If this option was taken, it could mean owners of these vehicles would have to stump up that amount every year they own the car.