Upcoming changes to VED

Changes to VED on cars first registered after 1 April 2017

In the 2015 Summer Budget it was announced that the rates of VED on new vehicles registered from 1 April 2017 were to be changed.

First Year Rates of VED will vary according to the carbon dioxide (CO2) emissions of the vehicle. A flat Standard Rate of £140 will apply in all subsequent years, except for zero-emission cars for which the standard rate will be £0. Cars with a list price above £40,000 will attract a supplement of £310 on their standard rate for the first 5 years in which a standard rate is paid. All cars first registered before 1 April 2017 will remain in the current VED system, which will not change. The new rates and bands for the post-2017 VED system are set out in the table below:

New VED system – for cars registered from 2017
Emissions (g/CO2/km) First year rate Standard rate*
0 £0 £0
0-50 £10 £140
51-75 £25 £140
76-90 £100 £140
91-100 £120 £140
101-110 £140 £140
111-130 £160 £140
131-150 £200 £140
151-170 £500 £140
171-190 £800 £140
191-225 £1,200 £140
226-255 £1,700 £140
over 255 £2,000 £140
*cars over £40,000 pay £310 supplement for 5 years

The current VED structure based on CO2 bands was introduced in 2001 when average UK new car emissions were 178 gCO2/km. The Band A threshold of 100 gCO2/km below which cars pay no VED was introduced in 2003 when average new car emissions were 173 gCO2/km. Since then, to meet EU emissions targets, average new car emissions have fallen to 125 gCO2/km. This means that an increasingly large number of ordinary cars now fall into the zero- or lower-rated VED bands, creating a sustainability challenge and weakening the environmental signal in VED. This is set to continue as manufacturers meet further EU targets of 95 gCO2/km set for 2020. Additionally, the system results in significant unfairness as owners of newer cars pay little or no VED while owners of older cars generally pay higher rates.

The reformed VED system retains and strengthens the CO2-based first year rates to incentivise uptake of the very cleanest cars whilst moving to a flat standard rate in order to make the tax fairer, simpler and sustainable. To ensure those who can afford the most expensive cars make a fair contribution, a supplement of £310 will be applied to the standard rate of cars with a list price (not including VED) over £40,000, for the first 5 years in which a standard rate is paid.

Your Comments

Call from EU battery manufacturers to develop a ‘Battery Strategy for Europe’

Batteries are at the heart of the shift towards a decarbonized society, enabling energy storage of renewables, energy efficiency and hybridization and electrification of transports. EUROBAT, the Association of European Automotive and Industrial Battery Manufacturers, publishes today its call for the development of a ‘2030 Battery Strategy for Europe’. Such a strategy would lead to more coherence between the several EU policies in the field of energy, transport and environment.

For Europe as a whole, EUROBAT says it is important to enable the future of its entire battery sector and ensure coherence between EU, regional and national policy initiatives. In particular, keeping and expanding the manufacturing base of all battery technologies in Europe will be of paramount importance for the industrial development of the European Union.

A variety of battery chemistries and technologies exists today: lead, lithium, sodium and nickel batteries. They all answer to different demands in terms of performance, capabilities and applications, and all of them are an important part of the solution to the challenges that climate change and energy dependence are presenting us with. Batteries respond to demands in different industrial sectors, from energy storage and grid stability to warehouse and port logistics, telecommunication and all modes of transport. European battery manufacturers have and will continuously create added value for European jobs, know-how and research & development. They are active in all battery market segments to various degrees, supplying batteries to European and international customers and directly employing more than 30.000 people.

With this initiative, EUROBAT is asking European policy makers to cooperate with all stakeholders, including manufacturers, suppliers, value chain partners, users and civil society, to develop such ‘2030 Battery Strategy for Europe’. Such overall strategic EU policy framework would provide business certainty for European battery manufacturers, create new opportunities for all battery technologies and deliver jobs, growth and innovation in Europe. The coming two years of the current EU Parliament and Commission should be used to develop the ‘2030 Battery Strategy for Europe’.

The full text of the EUROBAT call is available here.

Your Comments

Drivers facing even higher premiums

Motor insurance premiums could soar by a further £75 as a result of government changes to injury payouts.

The government announced yesterday that the discount rate would be cut from 2.5% to -0.75% as of 20 March, a decision which stunned the insurance industry.

Compensation payouts are adjusted according to the interest claimants can expect to receive by investing the money. With interest rates so low, the government says claimants won’t earn as much interest as before, meaning insurers will have to make up the difference.

The Association of British Insurers has labelled the move crazy and warned that 36 million motorists will pay higher premiums as a result. According to PwC, the average increase will be £50-£75, although drivers aged between 18 and 22 could see their annual rates shoot up by £1,000.

Drivers over 65 could see their premiums rise by up to £300.

Mohammad Khan, UK general insurance leader at accountancy PwC, said, ‘This announcement, on top of the recent increases in insurance premium tax, will make redundant any savings to premiums as a result of the government’s personal injury legal reforms which were anticipated to generate approximately £40 saving per motor insurance policy.’

Your Comments

HR Update

Increase to Compensation Limits and Tribunal Awards

The annual increases to compensation limits and minimum awards that are payable under employment legislation have just been announced, and will take effect from 6 April 2017; they include:

  • The compensatory award cap for claims of unfair dismissal increases from £78,962 to £80,541.
  • The minimum basic compensatory award where dismissal is unfair by virtue of health and safety, trade union, employee representative, or occupational pension reasons increases from £5,853 to £5,970.
  • Guarantee payments payable to an employee per day, increase from £26 to £27.
  • The statutory limit on a week’s pay to an employee for the purposes of calculating redundancy payments and for various other awards, including the basic or additional award in unfair dismissal claims, will increase from £479 to £489.

Where claims have been raised prior to 6 April 2017 and/or the relevant act or omission complained of occurred before 6 April 2017, the EXISTING rates will continue to apply regardless of when compensation is awarded.
Please do not hesitate to get in touch with us if you have any questions.

Your Comments