Below are the new proposed rates as issued by the DVLA so you can check cost pre- and post- 1 April 2017 costs based on the type of vehicle, its value and emissions.
Presently, the car tax system has been based on CO2 emissions. This means you can drive a brand new expensive vehicle with low CO2 emissions and pay very little (and sometimes zero) VED.
CO2 emissions for many vehicles have been lowered by manufacturers with the knock on effect of reducing revenue to the government. 25% of new cars don’t pay any road tax as they fall in to the lowest band (‘A’), namely vehicles with CO2 emissions of less 100 g/km. It is little wonder therefore, that the Chancellor announced last July 2015 he would be overhauling the UK’s car taxation system.
One significant change to look out for is a premium car tax that will impact on vehicles costing over £40,000 which will pay a £310 supplement for first 5 years at standard rate.
Many new cars will continue to pay zero vehicle excise duty in the first year, during which the tax for new vehicles will still be directly linked to CO2 emissions but in subsequent years there will be separate rates.
The changes will only apply to new vehicles registered after 2017. All existing cars on the road will continue to pay at the rates presently set.
Pre-April 2017 VED tax bands:
| CO2 Emissions in g/km (tax band) | First year rate | Annual rate |
| Up to 100 (A) | £0 | £0 |
| 101-110 (B) | £0 | £20 |
| 111-120 (C) | £0 | £30 |
| 121-130 (D) | £0 | £110 |
| 131-140 (E) | £130 | £130 |
| 141-150 (F) | £145 | £145 |
| 151-165 (G) | £180 | £180 |
| 166-175 (H) | £295 | £205 |
| 176-185 (I) | £350 | £225 |
| 186-200 (J) | £490 | £265 |
| 201-225 (K) | £640 | £290 |
| 226-255 (L) | £870 | £490 |
| Over 255 (M) | £1,100 | £505 |
From April 2017:
| CO2 emissions | First year rate | Standard rate | Standard rate (year two onwards) for cars costing >£40,000. Payable for five years |
| 0 | £0 | £0 | £350 |
| 1-50 | £10 | £140 | £410 |
| 51-75 | £25 | £140 | £410 |
| 76-90 | £100 | £140 | £410 |
| 91-100 | £120 | £140 | £410 |
| 101-110 | £140 | £140 | £410 |
| 110-130 | £160 | £140 | £410 |
| 131-150 | £200 | £140 | £410 |
| 151-170 | £500 | £140 | £410 |
| 171-190 | £800 | £140 | £410 |
| 191-225 | £1,200 | £140 | £410 |
| 226-255 | £1,700 | £140 | £410 |
| 256 + | £2,000 | £140 | £410 |
Summary of changes post-April 2017:
- Electric vehicles won’t pay any road tax. This being part of the ongoing Government commitment to electric vehicles.
- The premium car tax being introduced will mean an additional £310 vehicle excise duty charge every year on top of the duty rate for any vehicle with a list price over £40,000.
- A one off tax charge will be paid for the first year and the annual rates thereafter set out on a revised version of the current CO2 tax system. It is only after the second year that the CO2 scale is removed and replaced with flat rates.
Examples:
- A vehicle with emissions between 226-255 g/km presently paying a first year tax of £870 will find tax rising to £1,700 for the first year, from April 2017 onwards. The second year rate however would rise less steeply if the vehicle cost is below the £40,000 purchase price. This emphasises the importance of checking the type of vehicle, its CO2 emissions and its cost.
- A car rated at 100 g/km or below is currently free of tax but will (post April 2017) cost £400 over a three year period.
It will certainly be interesting to see how many manufacturers currently selling vehicles at just over £40,000 suddenly find themselves advertising at £39,999!
We will continue to monitor the incoming car tax changes and provide updates as 2016/2017 progresses.
We have previously written about the car tax disc changes, which gives advice in relation to paying car tax on a monthly basis so that you do not find yourself caught out without tax on your vehicle.
Tim Ridyard is a motoring law specialist in the Road Transport team at Woodfines Solicitors in Cambridge and regularly comments on motoring news. To discuss any of the above, please contact Tim on 01223 411421 or email at tridyard@woodfines.co.uk
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