Taxation, work and welfare
Vehicle Excise Duty reforms
22 April 2009
This page describes the system of vehicle tax (‘vehicle excise duty’ or ‘VED’) for cars, vans, motorbikes and Heavy Goods Vehicles, following announcements in the 2009 Budget.
Cars registered on or after 1 March 2001
Budget 2009 confirms announcements made at Pre-Budget Report 2008 on reforms to post-2001 car VED, to incentivise the purchase and manufacture of lower-carbon cars. These include:
- from 1 May 2009, an increase in the number of VED bands from seven to 13, in order to reflect changes in the fuel efficiency of vehicles. The new bands will also provide a greater incentive for drivers choosing a more efficient car, whether purchasing in the new or used car market; and
- from April 2010, the introduction of differential first-year rates of VED for brand new cars, in order to provide a stronger incentive to drivers at the point of purchase of a new car. This will not affect second-hand cars.
Budget 2009 also confirms the PBR accouncement that, to reduce pressures on motorists during the current economic downturn, there will be no significant rate changes to VED rates until 2010. As a result of this announcement:
- in 2009, no driver will pay more than £5 extra; and
- in 2010, no driver will pay more than £30 extra and many will see a tax cut of up to £30. A majority of drivers will pay the same or less than in 2009;
In both years, cars purchased before 23 March 2006 that emit over 225 g/km will maintain their exemption from the top rate of VED.
The full set of new rates is set out in table A.
Table A - Vehicle Excise Duty for Cars registered on or after 1 March 2001: rates from 1 May 2009 and 1 April 2010
VED band |
CO2 emissions (g/km) |
Standard rate 2009-10* |
Standard rate 2010-11* |
First-year rate 2010-11 |
| A | Up to 100 | £0 |
£0 |
£0 |
| B | 101-110 | £35 | £20 | £0 |
| C | 111-120 | £35 | £30 | £0 |
| D | 121-130 | £120 | £90 | £0 |
| E | 131-140 | £120 | £110 | £110 |
| F | 141-150 | £125 | £125 | £125 |
| G | 151-165 | £150 | £155 | £155 |
| H | 166-175 | £175 | £180 | £250 |
| I | 176-185 | £175 | £200 | £300 |
| J | 186-200 | £215 | £235 | £425 |
| K** | 201-225 | £215 | £245 | £550 |
| L | 226-255 | £405 | £425 | £750 |
| M | Over 255 | £405 | £435 | £950 |
*Alternative fuel discount: 2009-10, A-I £20, J-M £15; 2010-11 onwards, £10 all cars
**Includes cars emitting over 225g/km registered before 23 March 2006
Cars and vans registered before 1 March 2001
Cars registered before 2001 – which account for around a third of the fleet – are not subject to the CO2-based VED regime, because comprehensive data on their CO2 emissions is not available. Instead these cars have two rates, based on engine size. The Budget confirmed that:
- on 1 May 2009 both rates will increase by £5 only; and
- on 1 April 2010, the lower rate of VED for these vehicles will be frozen and the higher rate will be increased by £15.
These rates also apply to vans registered before 2001. Table B shows the new rates for pre-2001 cars and vans.
Table B - Vehicle Excise Duty for cars and vans registered before 1 March 2001: rates from 1 May 2009 and 1 April 2010
VED band |
2009-10 rate |
2010-11 rate |
| Up to 1549cc | £125 | £125 |
| Over 1549cc | £190 | £205 |
Vans registered on or after 1 March 2001
There is one standard VED rate for vans registered on or after 1 March 2001, and one discounted rate, for diesel vans that met Euro 4 emissions standards before these became mandatory. From 1 January 2009, vans that meet Euro 5 emissions standards, and are first registered between this date and 31 December 2010, will also be eligible for the discounted rate. Budget confirms that:
- on 1 May 2009 both the standard and the discounted rate will increase by £5 only; and
- on 1 April 2010, the discounted rate of VED for these vehicles will be frozen and the standard rate will be increased by £15.
Table C shows the new rates for post-2001 vans.
Table C - Vehicle Excise Duty for Vans registered on or after 1 March 2001: rates from 1 May 2009 and 1 April 2010
VED band |
2009-10 rate |
2010-11 rate |
| Euro 4* & 5** discount rate | £125 |
£125 |
| Standard rate | £185 |
£200 |
*for Euro 4 compliant vans registered between 1 March 2003 and 31 December 2006
**for Euro 5 compliant vans registered between 1 January 2009 and 31 December 2010
Motorbikes and Heavy Goods Vehicles
The Budget also confirms that VED rates for motorbikes and Heavy Goods Vehicles will be frozen in 2009, as will all related rates including Special Types Vehicles, Combined Transport vehicles and all vehicle categories linked to the basic goods rate.
Tables D and E show the rates for motorbikes and Heavy Goods Vehicles respectively.
Table D - Vehicle Excise Duty for Motorcycles: rates from 1 May 2009
VED band |
2009-10 rate |
| Up to 150cc | £15 |
| 151-400cc |
£33 |
| 401-600cc | £48 |
| Over 600cc | £66 |
Table E - Vehicle Excise Duty for Heavy Goods Vehicles and related vehicles: rates from 1 May 2009
VED band |
Standard rate 2009-10 |
Reduced Pollution Certificate Rate 2009-10 |
| A | £165 | £160 |
| B | £200 | £160 |
| C | £450 | £210 |
| D | £650 | £280 |
| E | £1,200 | £700 |
| F | £1,500 | £1,500 |
| G | £1,850 | £1,350 |
