A green thinktank declares the UK to be a 'tax haven' for SUVs that pollute the environment.

A study by a green thinktank reveals that the UK’s lower taxes on petrol SUVs compared to many countries in Europe is leading to an influx of large, environmentally harmful luxury vehicles.

The purchase of new petrol or diesel SUVs in the UK incurs significantly lower tax compared to neighboring countries such as France and the Netherlands, as well as other European countries, according to a report by Transport & Environment (T&E). This results in the UK being seen as a tax-friendly destination for larger, less eco-friendly vehicles.

The initial VED charge in Britain does not significantly encourage people to choose more environmentally-friendly cars, as the price difference between a petrol SUV and a battery electric model is smaller compared to other European countries with similar taxes on car purchases.

The initial VED rate for a mid to large-sized SUV, like the BMW X5, is priced at £1,565 in the UK. In France, the tax is €60,000 (£51,400) for the same type of car, with an added extra fee for heavier vehicles.

According to T&E, statistics on car sales in the UK from the previous year revealed that vehicles with higher levels of pollution had a significantly larger portion of the market compared to other countries. Additionally, the width of cars in the UK has surpassed the average sizes in most European countries, even exceeding the minimum requirement for on-street parking.

Vehicles emitting between 160g CO₂/km and 199g CO₂2/km were 7.5% of private registrations

Out of all private registrations, 9.3% consisted of cars with emissions of less than or equal to 200g CO2/km, while 7.5% were cars with emissions higher than 200g CO2/km.₂

In France, only 0.7% of sales for new cars were in the same bands compared to /km, which had an additional increase of 6.1%.

Although there are benefits for businesses to use electric cars in the UK, the rewards for individual owners to switch to eco-friendly options are decreasing. The government is preparing to implement a yearly vehicle tax for electric cars starting in 2025, as stated in Jeremy Hunt’s autumn budget for 2022.

Prior to next week’s budget, T&E recommended that the UK review its tax structure in order to discourage the rise in new SUV purchases, which saw a 23% increase in 2023. This could involve raising the initial Vehicle Excise Duty (VED) paid on the most environmentally harmful vehicles, as well as implementing a weight-based component in the tax system to specifically target the heaviest cars.

According to Ralph Palmer, the UK government is overlooking an opportunity to generate fair and straightforward revenue by not specifically addressing wealthy purchasers of large, environmentally harmful SUVs in their policies.

This could potentially lead to the UK becoming a destination for larger and more environmentally damaging cars, putting both the environment and other drivers at risk.

Adjusting the taxes for high-end, larger, and environmentally harmful vehicles in the UK to be more consistent with other European nations will boost the desirability of eco-friendly options for potential car purchasers.

The government’s representative stated that they aim to have all new cars and vans produce zero emissions by 2035. They have already allocated more than £2bn to aid in this transition.

“Over the past four years, there has been a 1,730% increase in new EV registrations annually, and there has been a significant rise in the sales of previously-owned pure electric cars.”

The UK has implemented additional tax policies, such as an increased supplementary rate for vehicles priced at £40,000 or above in later years. There is also a fuel duty on both petrol and diesel.