In March 2005, graduated vehicle excise duty (GRAD VED) was introduced as an incentive to purchase vehicles with low emission levels:
Rates for all other vehicles vary from £15 for motorcycles with an engine capacity under 150cc, up to a maximum of £1,850 for the largest heavy goods vehicles (HGVs). (Special rates apply to HGVs not used commercially.) A few special-purpose vehicles such as ambulances are exempt.
In tax year 2002 – 2003, it is estimated that evasion of the tax equated to a loss to the Exchequer of £206 million. In an attempt to reduce this, from 2004 an automatic £80 penalty (halved if paid within 28 days) is issued by the DVLA computer for failure to pay the tax within one month of the expiry of the previous tax disc. A maximum fine of £1,000 applies for failure to pay the tax, though in practice fines are normally much lower.
The police have also been granted devolved powers to tow or clamp any vehicles a police officer or PCSO sees, that is unlicensed on a public road.
Also note that vehicles constructed before 1 January 1973 are eligible for a free vehicle licence under the "Historic Vehicles" legislation. This is due to the age of the vehicle and a presumption of limited mileage. Initially this was a rolling exemption applied to any vehicles over 25 years old, however the cutoff date was frozen in 1997. The change to "pre-1973" was unpopular in the classic motoring press, and a number of classic car clubs are campaigning for a change back to the previous system.
The primary aim of the change is that HGVs from the UK and the continent pay exactly the same to use British roads (removing the ability of foreign vehicles to pay no UK tax). However, it is also expected that the tax will be used to influence routes taken (charging lower rates to use motorways), reduce congestion (by varying the charge with time of day), and encourage low emission vehicles.
In June 2005 the government announced plans to adopt a similar road user charging scheme for other road vehicles, which would work by tracing the movement of all vehicles using a telematics system. The idea raised immediate objections on civil and human rights grounds that it would amount to mass surveillance. An online petition protesting this was started and reached over 1.8 million signatures by the closing date of 20th February 2007.
From April 2009 there will be a reclassification to the CO2 bandings with the highest paying £455 per year and the lowest £0, the bandings have also been backdated to cover vehicles registered on or after 1st March 2001, meaning that vehicles with the highest emissions registered after this date pay the most. Pre 1st March 2001 vehicles will still continued to be charged according to engine size, above or below 1549cc.
From 2010 a new first year rate is to be introduced - dubbed a showroom tax. This new tax was announced in the 2008 budget, and the level of tax payable will be based on the vehicle excise duty band, ranging from £0 for vehicles in the lower bands, up to £950 for vehicles in the highest band.
Excise duties specifically for mechanically propelled vehicles were first imposed in 1920, under the 1920 Finance Act. At the same time, the 1920 Roads Act set up an account, termed the Road Fund, to receive all of the proceeds of the new vehicle excise duties, and to be used to finance road improvements.
In France, the vignette was abolished for private vehicles in 2001.
In Spain, this tax is called the motor vehicle circulation tax.
In Brazil, the states collect an annual Vehicle Licensing Tax (Taxa de Licenciamento Veicular), which has a fixed value for each vehicle category ad determined by each state, in addition to other taxes.
Pressure group urges government to give motorcyclists fair deal; VEHICLE EXCISE DUTY: DVLA considering introducing super tax for bikes over 1000cc.(Motoring)
Dec 29, 2001; THE Motor Cycle Industry Association (MCI) is urging the Government to play fair with motorcyclists when it looks at road tax...