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Budget 2007: Vehicle Excise Duty

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22nd Mar 2007
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For a Chancellor planning to leave No 11 and move next door, Mr Brown’s last Budget included a wide range of announcements stretching through the next three years. He may be gone later this year, but he will not relinquish his control over the tax regime completely! Rebecca Benneyworth reports.

One area where this is evident is the Vehicle Excise Duty (or Road fund licence) rates. These are now set by category, the boundaries of which are determined by the CO2 emissions of the cars. As expected, Mr Brown clamped down on the drivers of Band G cars (which emit more than 225g/km of CO2) by increasing the duty from £210 to £300 for petrol driven cars, and £215 to £300 for diesels, ending the differential between petrol and diesel cars. Those vehicles running on alternative fuels also see a hike to £285 from £200. These changes take effect from Budget day.

Most other bands see a modest increase of £5 per annum for alternative fuels and diesel – although in each band the petrol category increases by £15 to align it with the new higher diesel rate; for band F the non petrol increases are £10 rather than £5. Band A – emissions under 100g/km remains zero, and band B (emissions up to 120g/km) reduces to £35 for petrol and diesel and £15 for alternative fuels.

The increases in the next few years will be £5 for bands C to F and a further £100 for band G.

Summary – Petrol cars

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