The changes in Vehicle Excise Duty (VED) confirmed in March’s spring budget came into effect on 1 April.
Under the rules, new car buyers will pay a minimum of £140 a year in VED. In the first year from purchase, the amount will vary by carbon dioxide emission levels, before switching to the standard rate of £140. Cars worth over £40,000 will be subject to a £310 supplement for three years.
The changes came into effect after months of warnings on potential negative impacts from industry bodies such as the BVRLA, which claimed it could damage both the new car industry and the environment.
Matt Sutherland, chief operating officer of Alphabet, warned that the rise in VED, in conjunction with delayed lower BiK rates for ULEVs would also slow down the take up of low emission vehicles among fleets.
He said: “It is disappointing…VED rates for cars registered after 2017 may also provide a disincentive for the take up of ULEVs.”
BVRLA chief executive Garry Keaney said: “The VED changes will slow the rate at which these cleaner cars are brought on fleet and subsequently sold in the second-hand market.”
The RCA Dealer Network said that the rise in VED could lead to a boost of innovation in the used car industry. Sean Kent, director, corporate and independent dealers at the RAC Dealer Network claimed that the rise in VED could help the used car industry entice at lower end of the new car market.
Kent said: “Some new superminis and family hatches will see the amount of VED paid rise exponentially, by as much as nine times over the first three years if their life.
“We believe this is a great opportunity for used car dealers to position themselves as an alternative, highlighting the way in which VED is hitting new cars and the increasingly good value that used cars represent as an alternative.”