Green thinktank urges Autumn Budget levy on heavy SUVs, says Treasury losing nearly £2bn a year

Transport & Environment (T&E) has urged Chancellor Rachel Reeves to announce a weight‑based tax on large sport utility vehicles in the 26 November Autumn Budget, saying the current system leaves the heaviest cars "severely undertaxed" and costs the Treasury almost £2 billion a year.

The thinktank argues that the United Kingdom's Vehicle Excise Duty, which is set by a vehicle's official CO2 output, has not kept pace with an SUV boom and provides a de facto tax haven for heavier models. T&E contrasted the UK's approach with several continental systems that levy acquisition or ownership taxes based on both emissions and weight, saying buyers of the same large models can face dramatically higher bills elsewhere.

T&E proposed a "Large Vehicle Levy" that would add £10 per kilogram for vehicles above a threshold of 1,600 kilograms, with a 400kg higher allowance for fully electric models to reflect heavier battery packs. Under that formula, the thinktank says some of the heftier models now on sale would attract more than £10,000 in additional tax at the point of purchase. T&E calculates the levy could raise about £1.72 billion a year, and said the measure could bring in close to £2 billion toward narrowing what it described as the nation's fiscal shortfall.

In its analysis, T&E used the BMW X5 as an illustrative example, saying a buyer in Britain currently pays about £3,200 in first‑year VED tied to CO2 output, while a purchaser of the same model in France faces a far larger upfront bill because of weight‑based "malus" taxes. The group also said acquisition taxes for large SUVs across 13 European countries are on average more than three times higher than in the UK and noted that seven EU nations impose no such taxes.

Tim Dexter, T&E UK's vehicles policy manager, said the levy would make larger vehicles "contribute fairly for the damage they cause to roads, safety and the environment," while protecting most family cars from extra costs. He added that the charge would also create an incentive for manufacturers to reconsider introducing ever‑bigger models to their lineups amid rising profit margins on SUVs.

T&E framed its call within several public‑interest concerns. The group cited figures indicating SUVs now account for nearly three in five new car registrations in Britain and that 77 percent of new SUV models sold are petrol, diesel, hybrid or plug‑in hybrid, which it said risks locking in higher CO2 emissions for years to come. The thinktank also highlighted research it said shows heavier vehicles do more damage to road surfaces — estimating a two‑tonne SUV can inflict 16 times more road damage than a one‑tonne car — and repeated claims from previous reports that higher‑bonnet vehicles increase the fatality rate for pedestrians and cyclists in collisions.

T&E further said that 1.2 million new cars sold each year are larger than a typical UK parking space, contributing to congestion and pressure on public space; some local authorities have already restricted larger vehicles from certain public car parks, the group noted.

The proposal includes an adjustment for fully electric vehicles: a 2,000kg threshold rather than 1,600kg, to reflect heavier battery packs. T&E said such a concession would preserve incentives for electrification while ensuring heavier models pay for their additional impacts.

The Society of Motor Manufacturers and Traders (SMMT) criticised the proposal, warning it would "unfairly penalise families" that need larger vehicles. Mike Hawes, the SMMT's chief executive, said consumer demand drives vehicle design and manufacturers have responded to market preferences as well as safety and new technology requirements. He added that higher charges on heavier cars could act as a barrier to electric‑vehicle uptake when the market is under pressure.

Industry and campaign groups have long sparred over SUVs' role in emissions, safety and urban design. Some consumer advocates and dealers point to availability of smaller cars, including electric models, while environmental groups caution that continued high sales of heavier internal combustion and hybrid SUVs could slow progress toward climate targets.

The Government will present the Autumn Budget on 26 November. Any change to VED or the introduction of a point‑of‑sale levy would require ministerial agreement and legislative or regulatory action to implement. T&E framed the measure as both a revenue raiser and a policy lever to curb trends it says are worsening road wear, safety risks and emissions, while industry leaders stressed the potential social and market impacts of higher costs on larger vehicles.