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The UK’s vehicle tax system is failing to keep up with the SUV boom, leaving the heaviest, most polluting cars severely undertaxed under the current Vehicle Excise Duty (VED) as they surge to dominate the market.
A new analysis by Transport & Environment UK exposes Britain’s SUV tax loophole: buyers here pay up to 20 times less tax for the biggest models than in other European countries.
For example, a UK buyer of an £85,000 BMW X5 pays just £3,200 in vehicle tax, while a French buyer faces £66,600—a disparity that helps drive UK SUV sales to four times the level in France, undermining the UK’s public finances, public safety, and the nation’s climate goals.
While April 2025’s VED changes increased rates for higher-emission cars and boosted EV uptake, the CO₂-based tax system still fails to tackle the wider societal cost of oversized vehicles whose real-world emissions and impact on infrastructure are underpriced.
‘’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 £2 billion annually and play a real part in narrowing the £50 billion fiscal deficit." Tim Dexter, T&E UK’s Vehicles Policy Manager said.
The shift to bigger, heavier vehicles brings major societal costs requiring urgent action. A 10cm increase in vehicle front height raises pedestrian and cyclist fatality risk by 30%, while around 1.2 million new cars sold each year are bigger than a typical UK parking space, squeezing public areas and driving congestion. According to the YouGov polling, 61% of UK passenger car owners agree that “SUVs take up too much space”, while only 19% disagree.
Environmentally, 77% of new UK SUVs remain petrol, diesel, hybrid, or plug-in hybrid—locking in high CO₂ emissions for the next 10–15 years. A two-tonne SUV inflicts 16 times more road damage than a lightweight one-tonne car.
This growth is fueled by industry’s focus on larger, high-margin vehicles, most registered in urban areas where their size offers limited benefit and amplifies problems of congestion and safety. Public opinion is clear: YouGov polling finds 61% of UK car owners believe SUVs “take up too much space,” compared to just 19% who disagree—a mandate for change.
A weight-based levy would target oversized SUVs that pose higher road risks, contribute more pollution, and consume disproportionate space.
‘’Drivers themselves are clear on where extra SUV revenue should go – fixing Britain’s crumbling roads, making streets safer, and improving public transport. With fewer than one in five opposing action, there’s a strong public consensus that change is needed. 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,’’ Tim Dexter added.
