Car tax changes may see 50 percent fee added to sales of polluting petrol and diesel cars

Martin Lewis gives money-saving advice on VED car tax

New proposals from the UK Energy Research Centre (UKERC) would introduce a gradual tightening of tax between 2021 and 2030. Under the new idea, those purchasing models emitting more than 225gCO2/km would face a 50 percent purchase tax starting in 2021.

A year later this would affect more vehicles with the threshold decreased to cars emitting just 190gCO2/km.

This would carry on in small increments until 2030 when only zero-emission cars would avoid the tax.

The UKERC report warns the new tax policy could save 32 metric tonnes of Co2 between 2020 and 2030.

They say a further 65 metric tonnes could be saved between 2031 and 2050 once all combustion cars are paying the heavy tax.

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The UKERC said the new scheme would be a way to phase in the phase-out while encouraging motorists to make changes.

The report said: “A ‘phase out’ target date is helpful in providing a long-term signal and driving down emissions in the medium-to-long term but setting a future date which defines a before/ aftermarket may be too blunt and will lead to distortions and perverse behaviours in the lead-up.

“We have therefore explored a market transformation approach, essentially the ‘phase-out’ being ‘phased in’ over the coming decade.

“Highest-emitting vehicles are gradually phased out prior to the target date, after which only new zero-emission vehicles are sold.”

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The report added: “Setting a clear, phased approach would provide motor manufacturers with market certainty as consumers are steered towards greener vehicles.

“If implemented early, it may also buy time beyond 2030, potentially allowing for the phase-out date to be pushed a little further, thus alleviating some manufacturers’ concerns that they cannot transition in time.”

The UKERC carries out research into sustainable future energy systems and researches challenges and opportunities presented by the transition to net-zero. 

Data from the Society of Motor Manufacturers and Traders (SMMT) shows electric car sales have soared in 2020.

Sales of battery electric vehicles have risen by 177.7 percent over the past year as petrol and diesel sales fell.

However, fully-electric car sales make up just 5.8 percent of car sales this year with just 32,911 models sold.

This compared to over 845,000 petrol cars and 245,000 diesel vehicles over the past 11 months.

UKERC’s Professor Rob Gross warned drivers purchasing “inefficient” cars was bad for the environment.

He said: “You might think that people not buying cars is a good thing for the environment.

“But it’s not a good thing if they delay buying a relatively inefficient car, and that car is still being used for longer.

“Every gram of CO2 that enters the atmosphere stays there, potentially for hundreds of years.”

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