After much speculation that the ever-increasing number of cars that fall into VED bands A, B or C was becoming unsustainable, the Chancellor has today announced in his Summer 2015 budget that for cars registered from 1st April 2017 onwards, only ZEVs with a list price up to £40,000 will qualify for zero-rated VED.

ZEVs with list price above £40,000 will be zero-rated in year 1, but will attract a VED rate of £310 in years 2-6, dropping back to £0 from year 7 onwards.

Non-ZEVs will attract a stepped first-year rate of between £10 (for 1-50g/km) and £2,000 (over 255g/km). In years 2-6, there will be two standard rates, regardless of CO2 output: £140 for cars with list price up to £40,000, £450 for those with a list price above £40,000. From year 7 onwards, it reverts to a standard £140.

No doubt these rates will be adjusted from year to year (perhaps even before they’re implemented), but it’s interesting to see that a) even the least-polluting non-ZEVs will pay the same VED as the most; and b) the more expensive ZEVs will attract over £1500 in VED charges during the first 6 years.

And I can see that £40,000 cut-off being a problem (or opportunity?) for manufacturers selling cars around that price level (not that it’ll bother Zoe buyers…).