Clause 8 - Threshold for reduced general rate
Finance Bill
5:45 pm
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
The clause will indeed raise the engine size threshold below which the lower rate of VED—£105—is levied to 1,549 cu cm from 1 July. That means that 5.7 million additional cars will be taxed at the lower rate and the extension will be backdated to November.
That is the next stage of the reform of car vehicle excise duty that we have put in place during recent years. We started in June 1999 with a low rate for cars of below 1,100 cu cm; that rose to 1,200 cu cm on 1 March this year, backdated to March 2000. The Driver and Vehicle Licensing Agency recently wrote to about 3 million keepers of vehicles between 1,100 cu cm and 1,200 cu cm, and is currently making payments against licences for those cars taken out between March 2000 and February 2001. As I said, new cars registered on or after 1 March this year are taxed directly on the basis of their CO2 emissions—I shall return to the point raised by the right hon. Member for Fylde in a moment—the latest change taking effect on 1 July and being backdated to November.