Chancellor urged to end ‘£2bn a year SUV road tax haven’ in the Autumn Budget

SUV drivers should be taxed proportionately for the impact their cars have on our roads and the environment under new calls for the Chancellor to target heavier vehicles in the upcoming Autumn Budget.

The current Vehicle Excise Duty (VED) system – typically referred to as road or car tax – is ‘providing a haven’ to SUVs and their owners, which is costing the Treasury almost £2billion a year in lost revenue, according to a green thinktank.

Transport & Environment believes VED – which is solely based on a vehicle’s ‘official’ CO2 output – is ‘failing to keep up with the SUV boom’ and ‘leaving the heaviest, most polluting cars severely undertaxed’.

This is compared to other European nations, notably France, where car taxation is calculated on both a model’s emissions and weight. 

As a result, buyers of the largest polluting SUVs in these countries face a tax bill that can run into the tens of thousands of Euros.

T&E says the Government’s reluctance to incorporate weight-based surcharges is ‘undermining the UK’s public finances, public safety, and the nation’s climate goals’.

The green transport campaigner accused ministers of ‘failing to tackle the wider societal cost of oversized vehicles whose real-world emissions and impact on infrastructure are underpriced’ as it called for Rachel Reeves to introduce what it has dubbed a ‘Large Vehicle Levy’ in November. 

The thinktank has long campaigned for a clampdown on SUVs, especially in the UK where last year they officially overtook superminis to become the most-bought car body type for the first time on record.

Britain’s ‘SUV tax loophole’ sees buyers of new hulking models pay up to 20 times less tax than motorists on the other side of the channel, T&E claims. 

The group used the £85,000 BMW X5 as an example of how much money the UK Government is missing out on in potential taxation revenue.

Buyers of this luxury SUV in Britain today currently pay £3,200 in car tax in the first year based on its CO2 output, which dictates the ‘showroom tax’ rate levied for the first 12 months on the road.

In contrast, purchasers of the same model in France must stump up an eye-watering £66,600. This is because its ‘Malus tax’ system applies punishing weight-based penalties.

Across 13 European countries, acquisition taxes for large SUVs are applied at the point of sale.

These are more than three times higher than the UK’s. However, seven EU nations impose no tax at all. 

In France, the ‘Malus tax’ system applies weight-based penalties to target heavy SUVs 

A new £85,000 BMW X5 (left) costs £3,200 to tax in the first year in the UK. In contrast, buyers of the same model in France must stump up an eye-watering £66,600. T&E says there should be allowances made for electric models, like the iX3 (pictured right)

Not just France: Across 13 European countries, acquisition taxes for large SUVs are applied at the point of sale 

How would a Large Vehicle Levy work? 

T&E wants Rachel Reeves in her 26 November Autumn Budget statement to announce an additional tax of £10 a kilogram for vehicles above a threshold of 1,600kg.

This would add more than £10,000 to the cost of some heftier models, such as a Land Rover Defender.

While this would trigger a huge jump in taxation, the report argues that it is similar to the amount buyers spend on optional extras to make their vehicles more lavish.

EVs, which are typically heavier than combustion-engined models due to the bulk of their battery packs, should be given some reprieve from the additional sting under the proposals.

It recommends a 400kg higher threshold (2,000kg) allowance for fully-electric models to compensate for their heavier batteries.

T&E says Chancellor Rachel Reeves – seen here with a Government-issued Land Rover Discovery SUV in the background – could rake in an additional £1.72bn a year for the Treasury if she introduces a weight-based tax surcharge on SUVs in her Autumn Budget

A ‘Large Vehicle Levy’ would add more than £10,000 to the cost of some heftier models, such as a Land Rover Defender (pictured)

With SUVs accounting for almost three in five new car registrations in Britain – and the majority being petrol, diesel or hybrid powered – the thinktank has calculated that a large vehicle levy could bring in an additional £1.72billion a year for the Treasury.

Tim Dexter, T&E UK’s vehicles policy manager said. ‘With the Autumn Budget around the corner, the Government has a clear opportunity to act.

‘A straightforward weight-based Large Vehicle Levy would make larger vehicles contribute fairly for the damage they cause to roads, safety and the environment, while protecting most family cars from added costs.

‘This one measure could raise close to £2billion and play a real part in narrowing the £50billion fiscal deficit.’

Dexter says the SUV tax sting would help to apply the brakes to manufacturers who are consistently adding new bigger models to their line-up.

This is because SUVs are more lucrative for makers thanks to the higher margins they return at the point of sale, T&E stated.

Analysis conducted by CarGurus earlier this year found that half of cars in the showrooms of mainstream brands are now SUV-style models.

Dexter believes this is coming at a ‘major societal cost’.

A market study of mainstream brands across the UK found that half of new models in their line-ups are now SUV or crossover vehicles 

Transport & Environment says the increased availability of large SUVs is leaving less room for other road users

Many of the models deemed too big to be allowed into some authority-operated car parks are SUVs, as our infographic shows

Previous reports – also from environmentally-driven campaign organisations – claim that SUVs, which have bonnets some 10cm higher than a typical hatchback car, increase the pedestrian and cyclist fatality rate by 30 per cent when collisions occur.

T&E also estimates that 1.2 million new cars sold each year are bigger than a typical UK parking space, squeezing public areas and driving congestion.

As such, some local authorities have banned larger vehicles from using their public car parks across Britain. 

The thinktank also claims that a two-tonne SUV inflicts 16 times more road damage than a lightweight one-tonne car, with the nation’s drivers, riders and cyclists paying the price with costly pothole-related repair bills.

In terms of their polluting impact, it says that 77 per cent of new SUV models sold in Britain are either petrol, diesel, hybrid, or plug-in hybrid, which threatens to ‘lock in high CO2 emissions for the next 10 to 15 years’. 

Previous reports claim that SUVs, which have bonnets some 10cm higher than a typical hatchback car, increase the pedestrian and cyclist fatality rate by 30% when collisions occur 

Higher-fronted SUVs significantly increases the death rate when pedestrians are struck as they are more likely to be pulled under a moving vehicle rather than bounce off them, T&E says

Analysis carried out by Loughborough University on behalf of T&E said a driver of a RAM TRX truck is unable to see a child up to 9 years old directly in front of their bumper. For a driver of a Land Rover Defender, the high bonnet blocks their view of children up to 4.5 years, it claimed

‘Drivers themselves are clear on where extra SUV revenue should go – fixing Britain’s crumbling roads, making streets safer, and improving public transport.,’ Dexter added.

‘As the Autumn Budget approaches, a fair, no‑nonsense Large Vehicle Levy on oversized SUVs is a vital step to strengthen public finances and build safer, more liveable cities.’

Mike Hawes, the chief executive at the Society of Motor Manufacturers and Traders, responded to T&E’s report saying it would ‘unfairly penalise families’ who need bigger motors.

‘Consumers ultimately influence vehicle design, with manufacturers responding to market tastes and preferences,’ he told the Daily Mail.

‘Cars have, on average, increased in size over the years to reflect those changing preferences but also the need to accommodate vastly increased safety technology as well as, most recently, new technologies such as large battery packs to deliver the range drivers expect. 

‘Small cars are still readily available – including electric models – and charging more for heavier cars would unfairly penalise drivers and families who require a bigger vehicle for essential mobility and act as another barrier to EV uptake when the market is already under immense pressure.’