A few weeks ago, someone put a petition on petition.parliament.uk to ask the government to

Reduce Vehicle Excise Duty by 50% for vehicles aged 20 to 39 years

It currently (10 a.m., 7.iii.2026) has 43,529 signatures. The plea has generated a reply from someone in government, who basically said, no, you predominantly white males of a certain age, you.

I haven’t signed it. Why? Well, I thought about it, and then thought about it some more, and concluded that this is not the right solution. Of course, we want to keep old vehicles on the road and not see them scrapped because owners can’t afford VEDollars. But VED is in such a mess, it needs more than a tweak like this. I’ll try to explain VED’s present wrinkles, and then to come up with a solution.

For our international readers, VED means Vehicle Excise Duty. It is commonly called car tax. In a fantasy world, it’s designed to pay for the upkeep of roads. In the real world, it’s just one of many levers the government can pull to wring money out of its people. In 2024-5, it raised £8.4 billion, or 0.28 percent of GDP, according to the OBR.

The quantity raised is slated to rise, thanks to the first-year charge and the luxury car tax, and the fact that EVs are now joining in:

The system

For quite a while, VED was based around CO₂ emissions. That’s the case from 2001 to 2017. From 2017, a flat rate applies to all vehicles, but this is not backdated, so older vehicles may pay more, or less. There is also now a luxury car charge added to the VED, payable over years 2-6 of the vehicle’s life for cars that cost north of £40,000, and a 1st-year charge, which is still based on CO₂. If you go back to pre-2001, not that there are many vehicles that old remaining, the tax is based on engine size. The luxury car charge threshold is going to go up to £50,000 for EVs, to soften the blow of them having to pay the upcoming Pay Per Mile charge of 3p per mile. This paragraph has all come from the top of my head, so I may have to review it. Below I’m going to give a few illustrative examples, to show the range of charges involved.

BMW 323i yr 1982 = £0
Ford Focus Zetec 1.4 yr 2000 = £220
Ford Focus 1.6i yr 2003 = £265
Ford Focus 1.0T Ecoboost Zetec yr 2018 = £195
Range Rover Sport 4.2 V8 yr 2005 = £430
Range Rover Sport 4.2 V8 yr 2007 = £760
Range Rover Sport 5.0 V8 yr 2018 = £195
Range Rover Sport 4.4 V8 bought today for £118,400: Yr 1 = £5,490; Yr 2-6 £195 standard rate plus £425 luxury tax; Yr 7 onwards, £195.
BMW 118d Yr 2010, £35.

Just a few examples there, but you get the idea – the entire thing is a mess. The Range Rover Sport example typifies the chaos. An example registered before March 2006 pays £430 per year, but one from after March 1st 2006 pays £760. That’s because the top band was expanded, but the change wasn’t applied retrospectively, which was probably thought to be unfair.

Some considerations

1. All road users should contribute something. All registered vehicles use the road.
2. Road wear is proportional to the 4th power of mass per axle.
3. Acceleration is important, because most particulates are produced under acceleration.
4. Carbon dioxide: the planet is cooking.
5. Combustion particulates, NOx, etc…
6. VED is independent of miles driven.
7. I don’t believe in the luxury car tax. We already have VAT.
8. We want to keep old cars going, because this is the greenest option.
9. There is never going to be a fair way of charging VED.

On 1., I have in mind things like gantries, signage, CCTV suites, those guys that go haring up and down the road all day looking for debris etc, rescue vehicles.

Re: 2. and 3., at this point you’re probably thinking, when Jit is the dictator of the UK, he’s going to punish EVs for being too fat, and for accelerating too fast. Well, maybe my pro-ICE bias is shining through a bit. But my prime thinking goes back to the soul of VED – to pay for the upkeep of the roads. Based purely on mass per axle, then HGVs are orders of magnitude more damaging than even the heaviest EV. But we can’t apply the tax proportionally, else we will tax commerce off the road.

Item 4. is probably annulled by fuel duty, I think. Since every gram of CO₂ emitted was formerly petrol, then a hefty “carbon tax” has already been paid. In fact, I calculated this pseudo-tax to be >£1000 per tonne of CO₂ emitted, if memory serves – it is in these pages somewhere, if I can find where. It’s here. But it was calculated ther per tonne of C, not CO₂, so it’s even more monstrous.

Regarding 5. and particulates etc, I think this should be discounted. It is in theory part of the MOT test, after all. I would like to see black smokers pulled over by the cops, because anecdotally, it looks like 1% of the vehicles produce 99% of the (tail pipe) particulates.

On 6., and the problem that road use is not the same for all vehicles, well at least there is the fuel duty, and now the Pay Per Mile tax for EVs, to partly address that variation.

Regarding 7., as noted, there is already something called VAT, so I can’t see the fairness of charging people more for expensive cars on top of that. The expensive car does not automatically create more road wear or pollution, so that should be out.

On 8., keeping old cars going – this is an obvious thing to do, but on the other hand, the old car may use the road as much as a young car. I think the current system (exempt from 40 years) is probably correct, although it would be possible to shorten the number of years needed to qualify as tax exempt. Few cars get to enjoy this privilege as matters are. I’ll produce a recommendation for a new age cut off in a moment.

On 9., this is a kind of shrug. We can’t perfect it, but it can be better than what we have, while raising the same money for the exchequer.

Basic numbers

UK car fleet, 2024 = 36,362,160
VED take: 8,400,000,000
Average VED per car = £231 (i.e. £36 more than the present default value). The calculated number includes cars that do not currently pay VED because they are >40 years old.

Average age of a car = 10.0 years. This is also close to the median age. So, half of all cars are <10 years old.

Historic vehicles and cancelling VED

The figure above is not a survivorship curve – for that, we’d need to know the number of cars registered in each year. So half of the fleet is older than ten years, but that does not mean necessarily that half of all cars are scrapped within 10 years.

Only 1% of cars are 40+ years old. So being released from the Chancellor’s palpation at that age is not a very generous cutoff. At the moment, the 40-year cutoff means that the VED take is spread among 99% of the fleet. Above, I wrote that the average VED per car is £231. Actually, it’s £233 if you ignore the >40 year cars; making cars over 40 free, costs the average car £2. If we made the cutoff >25 years, i.e., everything over 25 years pays no VED, then the average for the remainder would need to be £242.

If that sounds low, it’s because, while only 1.0% of cars are older than 40, only 3.65% are older than 25. The rump is still large enough to absorb this policy, which I think would be justified in terms of the goal of keeping things going as long as they are still viable. (Incidentally, bump it up to £253 on average and you can make everything older than 20 years free – that’s how biassed the fleet is towards young vehicles.)

How to rejig VED for the vehicles that still pay

I don’t think basing VED on CO₂ emissions is a good idea. That’s because, as mentioned, ICE cars already pay fuel duty. My calculation based on the average CO₂ emissions per km of the 2024 fleet is that fuel duty adds an average of 5p per mile to the cost of travel (6p per mile with VAT). Note that figure does not include the cost of the fuel. For reference, the numbers are:

2310 g CO₂ / l petrol (this is what the AI said; I have my own calculation somewhere, but haven’t checked)
133.7 g CO₂ / km (fleet average emissions, for cars only, excluding EVs). The number also does not include the part of the fleet with “unknown” emissions.
~0.06 l petrol / km
£0.5295 / l petrol in duty (ex. VAT)
~£0.03 cost per km of duty
~£0.05 cost per mile of duty
~£0.06 cost per mile of duty, inc. VAT.

The 6p per mile charge on ICE compares to the 3p per mile that EVs are going to pay from 2028, and the 1.5p that PHEVs are gong to pay. (The latter will also pay fuel duty.)

What about the mass on axle, and acceleration?

Unfortunately, I don’t have the data to calculate new VEDs for all extant vehicles based on these parameters. It would be quite time-consuming to work this out. I will note that according to ev-database.org, the Porsche Taycan Turbo GT Weissach (no, it doesn’t have a turbo) tips the scales at 2.295 tonnes and has 0-62 mph time of 2.2 seconds. Accelerationtimes.com says that the humble Ford Fiesta 1.0 Ecoboost takes 8.8 s to get to 60 mph (that would have been considered fast, in my day – anything under 10 s was fast). It weighs in at 1.15 tonnes.
Simply looking at the value of its mass / acceleration, the Taycan scores 100X the Fiesta. (Yes, that ignores the 4th power, and the fact that there are two axles.) I don’t think extreme versions of VED based on this sort of thing are viable, or fair, even if it is more proportional to road wear and particulates, etc.

If I were to advise our Chancellor on this topic, I would first consider as a baseline scenario a flat rate for all at about £242, with no charge for cars older than 25 years.

However, it seems somehow ludicrous to charge the same for a Fiesta as a Taycan. I think a better plan would be a flat rate – to pay for things other than road wear – £100 seems like a nice round figure that I plucked from the air. The rest can be made up appropriately, while totalling the same. Naturally, I can’t work out the value without buckets of data. But here’s an example with the mass categories in 500 kg bands. <1000 kg for the first, and every 500 kg thereafter, up to the 3 tonne monsters. Something like:

<1000 kg = £100 (for example, Austin Mini)
1000 kg < x < 1500 kg = £175 (for example, Ford Fiesta)
1500 kg < x < 2000 kg = £250 (for example, Volvo XC40)
2000 kg < x < 2500 kg = £325 (for example, Porsche Taycan
2500 kg = £400 (for example, Rolls-Royce Spectre)

…ish. Tweaking would be needed to get the total up to the current £8.4 billion. Probably upwards, because even in these days of ever fatter cars, the average is still probably in the second bucket. Of course, it might be better to separate things into 100 kg buckets.

For simplicity, acceleration is not included.

There are no first year charges, and no luxury car tax. Yes, some cars will pay more than they do today, in particular those from 2001-17 in the low CO₂ brackets. What about the impractical Pay Per Mile for EVs? I don’t like it, and I see a lot of avoidance coming, unless the Chancellor chooses to use more insidious methods to collect the data. But I don’t like fuel duty either, and that is effectively a Pay Per Mile tax. This at present raises £24.4 billion (+ VAT), almost 3 times VED (but it is slated to slowly fall – albeit after a short-term rise, thanks to the cancellation of the current 5p discount, due in a few months, and the re-attachment of the escalator). We could simply quadruple the above VED bands, and get rid of fuel duty altogether, and the oppressive Pay Per Mile. That would, of course, penalise light users, and favour drivers who do a lot of miles.

Conclusion

Well, there is no conclusion. Or rather, the conclusion is that the system is a mess and there is no easy, simplifying fix. Like a moth around a hurricane lamp, I have circled around the subject without ever reaching the heart of it. I would like to have minions at my command to work up the various options, but sadly, I don’t.

I would though be delighted to hear other Clisceppers’ ideas for a fair way to simplify VED. Please alert me to numerical or logical errors. I have a seasonal virus, and the numbers are not as clear to me as they sometimes are.

/message ends

Postscript

While fuel duty raises about £24 billion, ex. VAT – and I have yet to hear a cogent reason for double taxation here – the EV lobby has recently scored a major victory in its own battle against “unfair” taxation. It has been decided that the appropriate VAT rate for public charging should be 5%, the same as the domestic rate for electricity, rather than the commercial rate of 20%. [See for example, Fleetpoint.]

Now, at the moment, the amount raised by VAT on public charging is still in the “trivial” bucket, compared to the grand scheme of things. The AI seems to indicate a figure of around £100 million presently, which, if HMRC accepts the ruling, will automagically become £25 million.

Naturally, when everyone is driving an EV, the loss of about £35 billion in fuel duty + VAT* will have to be offset by a draconian charge on EVs. If I were them, I would not celebrate this victory too loudly. Sauron’s eye might be drawn their way.

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*Guessed by assuming that the duty on petrol is roughly equal to the cost of the petrol; both parts then subject to the 20% VAT.

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The featured image is of a Spectre, snipped from Rolls-Royce’s own site. They ought to support my new system, I should think. According to EV-database.org (see stats below), the Spectre weighs in at a shade under 3 metric tonnes. Not bad for a coupe. Not captured in the shot, but an unusual feature of this fat car, is that its doors open the wrong way.