VED
The Vedas are the oldest extant Indo-Aryan religious texts, composed orally in Vedic Sanskrit between approximately 1500 and 500 BCE by Indo-European-speaking peoples in the northwestern Indian subcontinent.[1] They comprise four principal Samhitas—Rigveda, Yajurveda, Samaveda, and Atharvaveda—totaling over 20,000 verses that include hymns, sacrificial formulas, chants, and spells, serving as the foundational scriptures (śruti) of what later developed into Hinduism.[2] Traditionally regarded as apauruṣeya (authorless and eternal), revealed to rishis through divine insight rather than human authorship, the Vedas outline early Vedic cosmology, rituals, and metaphysics, with empirical linguistic and archaeological evidence supporting their stratified composition over centuries amid migrations and cultural synthesis in the Punjab region.[1] Their transmission relied on rigorous mnemonic techniques until commitment to writing around the mid-first millennium BCE, influencing subsequent Indian philosophy, law, and science while sparking scholarly debates over exact dating due to the absence of contemporary inscriptions and reliance on comparative philology.[2]Overview
Definition and Purpose
Vehicle Excise Duty (VED) is an annual excise tax imposed on the registration and use of most mechanically propelled vehicles kept or used on public roads in the United Kingdom.[3] Administered by the Driver and Vehicle Licensing Agency (DVLA), it applies UK-wide to categories including private cars, light goods vehicles, motorcycles, and buses, with exemptions for certain non-road or specialist vehicles.[4] Rates are calculated based on vehicle type, CO2 emissions (for post-2001 registrations), engine size or fuel type (for older models), and list price for newer cars, requiring payment via licence disc or declaration of non-use.[5] Failure to pay renders the vehicle liable to enforcement, including fixed penalties up to £1,000 and potential clamping or seizure.[6] Originally enacted under the Customs and Inland Revenue Act 1888 and consolidated in the Roads Act 1920, VED was designed to fund road infrastructure development, with revenues hypothecated to the Road Fund under the Development and Road Improvement Funds Act 1909.[3] This ring-fencing ended in 1937, after which proceeds entered general Exchequer funds rather than being earmarked exclusively for highways.[3] By the 2023/24 fiscal year, VED generated £7.4 billion, projected to rise to £11.1 billion by 2029/30 amid policy shifts toward zero-emission vehicles.[3] Beyond revenue generation, modern VED frameworks incorporate environmental incentives, with graduated rates since 2001 penalizing higher CO2 emitters to promote fuel-efficient and electric vehicles, aligning with successive governments' decarbonization targets.[3] Reforms in 2017 introduced first-year rates up to £2,000 for high-emission cars and an annual £410 supplement for vehicles exceeding £40,000 in value, extending beyond emissions to address fiscal equity for luxury models.[7] From April 2025, zero-emission cars lose full exemption, incurring a £10 standard rate to equalize treatment with internal combustion engines and sustain revenue amid electrification.[8]Scope and Applicability
Vehicle Excise Duty (VED) applies to most mechanically propelled vehicles used or kept on public roads in the United Kingdom, encompassing categories such as private cars, light commercial vehicles, motorcycles, taxis, buses, and heavy goods vehicles.[9][3] The tax is levied annually on licensed vehicles within these classes, with liability determined by factors including vehicle type, CO2 emissions, and registration date.[5] It covers the entirety of the UK, including England, Scotland, Wales, and Northern Ireland, though procedural differences exist in Northern Ireland, such as requiring a Trade Endorsement Certificate (TEC) for taxing at certain post offices.[9] The registered keeper, as listed on the vehicle's V5C log book, is responsible for paying VED, which must be renewed before using or keeping the vehicle on public roads.[9] Vehicles declared as Statutory Off Road Notification (SORN) are exempt if not used or parked on public roads, allowing keepers to avoid payment during periods of non-use.[9] Failure to tax a liable vehicle can result in fines up to £1,000, enforced by the Driver and Vehicle Licensing Agency (DVLA).[9] Certain vehicle types and uses qualify for full exemptions from VED. These include vehicles constructed or adapted for use by disabled persons (excluding ambulances), historic vehicles manufactured more than 40 years prior to 1 January of the current year (e.g., pre-1985 models in 2025), mobility scooters and powered wheelchairs used by disabled individuals, and vehicles employed solely for agricultural or horticultural purposes on non-public roads.[10][3] From 1 April 2025, zero-emission vehicles such as fully electric cars, vans, and motorcycles lost their previous exemption and became liable for VED, payable at a first-year rate of £10 for new cars followed by the standard annual rate thereafter, though low-emission models (under 100g/km CO2) incur a reduced £20 annual rate.[11]Historical Development
Origins and Early Implementation (Pre-20th Century)
The earliest forms of vehicle taxation in Britain emerged in the 17th century with the licensing of hackney carriages, public horse-drawn vehicles for hire, under a 1637 ordinance in London to regulate fares and ensure roadworthiness.[12] This system imposed duties collected by local authorities, marking an initial effort to fund urban infrastructure through usage-based fees on non-private conveyances.[13] A broader carriage tax was enacted in 1747 via the Horse and Carriage Tax Act, requiring annual payments from owners of horse-drawn vehicles employing two or more horses, with exemptions for agricultural carts, trade wagons, and basic one-horse carts to avoid burdening essential economic activities.[14] Rates varied by vehicle type—for instance, four-wheeled carriages faced higher duties than two-wheeled chaises—and proceeds were earmarked for highway maintenance under the oversight of turnpike trusts, reflecting a causal link between wheeled traffic and road wear.[15] This tax persisted with modifications until 1782, when it was consolidated into assessed taxes, demonstrating fiscal reliance on visible luxury indicators amid growing reliance on indirect levies during the 18th century.[14] In the late 18th and 19th centuries, taxation expanded to target non-commercial horse usage, with a duty on pleasure horses—excluding working draft animals—imposed from 1784 to 1874 at rates scaling with the number of animals, such as 10 shillings annually for a single saddle horse.[16] Carriage owners also paid additional fees for armorial bearings displayed on vehicles, a proxy for wealth, as stipulated in acts like the 1823 tax schedules, which levied £2 8s on coaches with such emblems.[17] These measures, often bundled with taxes on male servants and game licenses, formed a regressive yet administratively simple regime favoring direct assessment over income-based alternatives, yielding revenues that supported local road commissions amid industrialization's demands on transport networks.[18] By the late 19th century, as bicycles and early velocipedes proliferated, the Customs and Inland Revenue Act 1888 formalized a general vehicle duty, initially at 5 shillings per bicycle and escalating for carriages, administered nationally to streamline collection previously fragmented across localities.[3] This prefigured motor-era excise duties by tying taxation to registration and road impact, though enforcement relied on self-reporting and spot checks, with yields funding general revenue rather than exclusively highways until subsequent reforms.[3]20th Century Reforms and Horsepower Tax
The horsepower-based taxation system for motor vehicles emerged with the Finance (1909-10) Act 1910, which levied annual duties scaled according to a notional "taxable horsepower" rating derived from engine cylinder dimensions, ranging from £2 2s for vehicles up to 6 horsepower to £42 for those exceeding 48 horsepower. This approach aimed to apportion costs for road wear and maintenance proportional to vehicle power, reflecting the era's rudimentary understanding of pavement damage from heavier, more powerful engines. The Roads Act 1920 formalized the regime by mandating vehicle registration, issuing of license discs (from 1921), and hypothecation of revenues to the Road Fund for highway improvements, with initial rates set at 20 shillings per horsepower for cars.[3] The taxable horsepower was computed via the Royal Automobile Club formula, introduced in 1910 at the government's behest: rating = (bore diameter in inches)2 × number of cylinders ÷ 2.5 for multi-cylinder engines, ignoring stroke length and actual output to simplify assessment and discourage large-bore designs that maximized power per tax unit.[15] This metric, while crude and increasingly misaligned with advancing engine efficiencies by the interwar period, persisted as duties were adjusted via annual Finance Acts to balance revenue needs against motoring growth; for example, rates doubled in some categories during the 1926 General Strike fiscal response, then eased in 1935 to 15 shillings per horsepower amid Depression-era industry stimulus efforts.[19] World War II suspended routine reforms, with rates frozen to support wartime production, but postwar reconstruction prompted the Finance (No. 2) Act 1947 to replace horsepower with engine cylinder capacity (in cubic inches initially, later cubic centimeters) for passenger cars, recognizing that the old formula undervalued compact, high-efficiency engines and complicated enforcement amid technological shifts.[3] Duties for cars under 1,000cc fell to £5 annually, scaling to £20 for over 3,000cc, while commercial vehicles shifted to unladen weight bases. Subsequent decades saw incremental rate hikes—such as 1956 increases averaging 25% to fund infrastructure, and 1960s escalations tied to inflation and social spending—without altering the capacity metric, though hypothecation to roads ended in 1937, redirecting funds to general revenues despite initial statutory intent.[20] These adjustments reflected causal pressures from rising vehicle ownership (from 2 million in 1920 to over 15 million by 1970) and fiscal demands, yet drew critique for regressivity as fixed rates burdened lower-income owners disproportionately to usage.[3]Shift to Emissions-Based System (2001 Onward)
The emissions-based Vehicle Excise Duty (VED) system was implemented for cars first registered on or after 1 March 2001, replacing the prior engine capacity-based taxation with bands tied to CO2 emissions in grams per kilometre (g/km). Announced in the 2000 Budget under the Labour government, the initial framework comprised four graduated bands, with rates escalating according to emissions levels to incentivize selection of lower-emitting vehicles amid rising environmental concerns. At introduction, average new car CO2 emissions stood at 178 g/km, positioning most vehicles in higher bands.[7][21][20] Subsequent refinements expanded the band's granularity to better reflect technological improvements in vehicle efficiency. The 2002 Budget added a fifth band, followed by a sixth in 2003; by the 2006 Budget, a seventh band (G, for over 225 g/km at £210 annually) was created for post-23 March 2006 registrations, while band A (up to 100 g/km) received a zero rate. The 2007 Budget raised band G to £300 for 2007–08 and £400 for 2008–09. These adjustments applied prospectively to new registrations but aimed to maintain progressivity as fleet-wide emissions declined.[21][20] A major expansion occurred in the 2008 Budget, effective 1 April 2009, increasing bands to 13 (A–M) with finer 5 g/km increments in lower ranges and rates up to £455 for band M (over 255 g/km) by 2010–11. Unlike prior changes, this applied retrospectively to all post-1 March 2001 cars, rebanding about 1.1 million vehicles (5% of the eligible fleet) and shifting some from band F to higher L or M, with maximum increases of £440. The 2009 Budget further introduced a first-year rate for new high-emission cars, reaching £950, to amplify purchase-stage disincentives while limiting annual rate hikes to £5 (2009–10) and £30 (2010–11).[21][20] The Conservative government reformed the system again from 1 April 2017 for new cars, shifting to an emissions-based first-year rate followed by a flat £140 annual rate (later indexed), plus a £310 expensive car supplement for years 2–6 on vehicles exceeding £40,000 list price. Zero-emission cars remained exempt initially to promote uptake. From 1 April 2025, zero-emission cars lose full exemption, incurring a £10 first-year rate and £195 standard rate thereafter, alongside the supplement where applicable, aligning taxation with broader fiscal sustainability as electric vehicle adoption grows.[20]Current Framework
Rate Structures and Calculation Methods
Vehicle Excise Duty (VED) rates for cars registered on or after 1 April 2017 are structured around a first-year rate graduated according to the vehicle's CO2 emissions, followed by a standard annual rate from the second year onward. The first-year rate is calculated using the official CO2 emissions figure (g/km) declared at the time of type approval, with bands escalating from £10 for zero-emission vehicles (such as new electric cars registered from April 2025) to £2,745 for emissions exceeding 255 g/km.[11][22] From the second year, all such vehicles pay a flat annual rate of £195, adjusted annually in line with the Retail Prices Index.[22] This structure applies regardless of fuel type, though zero and low-emission vehicles previously exempt now incur the £10 first-year charge and £195 thereafter to align with broader taxation of non-petrol/diesel vehicles.[11] For vehicles first registered between 1 March 2001 and 31 March 2017, rates remain based on fixed CO2 emission bands established under the pre-2017 system, with no first-year supplement. These annual rates, updated for inflation from April 2025, range from £20 for emissions up to 100 g/km to £760 for over 255 g/km, reflecting the original banding (A to M) tied to fuel type and emissions at registration.[22] Calculation involves cross-referencing the vehicle's recorded CO2 figure against these static bands, without adjustment for list price or subsequent efficiency improvements. Pre-2001 cars, primarily taxed on engine capacity rather than emissions, pay £20 annually if under 1,549cc or £335 if 1,549cc or larger, a holdover from the original horsepower-based framework transitioned to cubic capacity.[22] Additional calculation elements include the expensive car supplement for post-2017 vehicles with a list price exceeding £40,000, adding £425 per year for the second to sixth years of registration (totaling £2,125 over five years), determined at first registration using the manufacturer's recommended retail price excluding VAT and options.[23] Rates for other vehicle categories, such as vans and motorcycles, follow parallel emissions-based or capacity-based methods but with distinct bands; for instance, light goods vehicles pay a flat £335 annually unless zero-emission, which incur £10 first year then £341.[24] All VED is computed via the Driver and Vehicle Licensing Agency using vehicle registration data, with payments due at licence renewal periods of 6 or 12 months, prorated for mid-year changes.[9]| CO2 Emissions (g/km) - Post-2017 First-Year Rates (from April 2025) | Rate (£) |
|---|---|
| 0 | 10 |
| 1-50 | 110 |
| 51-75 | 130 |
| 76-90 | 270 |
| 91-100 | 350 |
| 101-110 | 390 |
| 111-130 | 440 |
| 131-150 | 540 |
| 151-170 | 1,360 |
| 171-190 | 2,190 |
| 191-225 | 2,610 |
| 226-255 | 2,745 |
| Over 255 | 2,745 |