Fuel Efficient Cars Lower Tax Take in UK

April 29, 2015 Taxation in EU

LONDON – Tax revenues in the UK are coming under risk due to the consumers’ preference for efficient cars and plug-in vehicles.

According to new information issued by the UK Society of Motor Manufacturers and Traders (SMMT) earlier this week, nearly 70 percent of cars sold in the UK over the course of 2014 had low enough carbon emissions to qualify for an exemption from Vehicle Excise Duties.

Currently, the government grants exemptions from the vehicle excise duty on purchases of cars with emissions levels of less than 130 grams per kilometer.

In 2013 the collection of vehicle excise duties resulted in tax revenues of approximately GBP 6 billion, however, these revenues are coming under threat due to the increasing efficiency of new cars, and the popularity of low-emissions vehicles in the UK.

Over the course of 2014 the UK had the largest uptake of plug-in electric vehicles compared to any other country in Europe.

It was also noted that the raised use of electric vehicles is putting pressure on the government’s collection of fuel duties, which brought in GB 27 billion in 2013, as these more efficient cars reduce the need for traditional fuels.

Photo By: K?rlis Dambr?ns