Budget: new 13-band VED system

THE banding groups for Vehicle Excise Duty (VED) expands in 2009. VED is sometimes referred to as road tax.

VED Groups A-G have been joined by bands I to M.

At the same time the standard rate for cars with emissions below 150g/km reduces; while cars with higher emissions will pay more – as much as £440 for cars with emissions above 255g/km.

The following year, an additional tax over and above the standard VED rate is payable on new cars – a “showroom tax” . This will affect cars with emissions above 130g/km, the tax ranging from £115 to £950.

Alternative fuel cars – such as the Honda Civic Hybrid and Toyota Prius – have a discount of £20 (2008/09); and £10 (2009/10).

How will this affect your business motoring?

In most cases it is likely to increase the cost modestly. But not always. The key thing will be to time a replacement vehicle before the “showroom tax” kicks in. Let’s take some examples over three years.

Honda Civic Hybrid (hybrid qualifies for discount), 109g/km