The government’s planned overhaul of the Vehicle Excise Duty system could put drivers off buying low-emissions hybrid and plug-in hybrid cars, the RAC has warned.
Under the new rules, which were first unveiled by Chancellor George Osborne as part of the summer budget in August, will see all hybrids pay a flat fee of £140 in tax annually after the first year.
According to research conducted by the RAC, interest in either hybrids or pure electric cars has been rising, with almost a fifth of drivers considering purchasing one in the near future.
In particular, the RAC claims that the Volkswagen Group ‘dieselgate’ scandal has made motorists think more carefully about emissions, while running costs have also attracted new buyers.
However, the rising demand could be set to change with the introduction of the VED changes from 2017, with the current reduced tax incentives offered for low-emissions vehicles essentially nullified.
From 2017, only cars which produce zero emission altogether will be tax-free in both the first and subsequent years, while currently any car that produces less than 100g/km of CO2 is exempt.
According to the government, the tax revisions have been made in order to account for more buyers opting to choose vehicles which produce less emissions, but the RAC warns it could backfire.
David Bizley, chief engineer for the motoring body, said: “We applaud the Government's aim to simplify the VED system, but have concerns.
“The proposed new regime may slow the significant progress that has been made in reducing carbon dioxide emissions from passenger cars and light commercial vehicles.”
He added: “The Government needs to find a way of continuing to incentivise motorists to switch to low-carbon whilst maintaining income for the Treasury.”
Department for Transport figures show that registrations of ultra-low emission cars increased by 19 per cent to 34,666 in the second quarter of this year, up from 33,697 between January and March.
Between the start of 2010 and the end of June this year, approximately 37,742 vehicles which count as having ultra-low emissions have been registered in the UK, around three per cent of all new cars.