2017 car tax changes and what they mean for you
If you’re thinking about making a new vehicle purchase, you may want to stop and think about the way the new VED changes are going to affect you. Any new vehicle that’s been registered after April 1st 2017 will now be subject to increased tax.
These changes have been set in place by former Chancellor of the Exchequer George Osbourne, as owners of some new cars were paying very little (if any) road tax when they purchased their new vehicle.
One theory is that this was causing the government to lose revenue as more and more vehicles were being produced that fell under the lower emissions bracket. Another theory is that the change is trying to encourage more drivers to buy vehicles that aren’t as harmful to the environment, for example hybrid or fully electric cars.
The new rates explained
The vehicle tax that you’ll pay for the first year is based on the vehicles’ CO2 emissions.
After this first year ends, the payable tax is dependent on the type of vehicle and list price, with a £310 supplement for cars with a list price over £40,000. For example:
- Petrol and diesel vehicles will pay £140 a year (plus £310 depending on list price)
- Hybrid, bio ethanol and LPG vehicles (alternate fuel) will pay £130 a year
- Vehicles that emit zero CO2 emissions pay £0 a year
As we’ve already explained, vehicles that were registered before April 1st 2017 won’t be subject to the changes.
Now these changes have come into effect, vehicles have been segmented out into 13 different bands that decide on how much tax you’ll pay in your first year of ownership.
These bandings range from Band A to Band M, with the higher CO2 emission vehicles being taxed more.
VED Tax changes from April 1st 2017
| Emissions (g/km of CO2) | First Year Rate | Standard Rate |
|---|---|---|
| 0 | £0 | £0 |
| 1-50 | £10 | £140 (£130 for vehicles using an alternative fuel supply: hybrids, plug-ins, bio-ethonal and LPG) |
| 51-75 | £25 | |
| 76-90 | £100 | |
| 91-100 | £120 | |
| 101-110 | £140 | |
| 111-130 | £160 | |
| 131-150 | £200 | |
| 151-170 | £500 | |
| 171-190 | £800 | |
| 191-225 | £1,200 | |
| 226-225 | £1,700 | |
| Over 255 | £2,000 | |
| All cards priced above £40,000 pay £310 annual supplement for five years | ||
Under these new regulations, the only vehicles that are going to be exempt are fully electric and hydrogen powered cars.
However, it’s not just the fuel type and CO2 emissions that define the vehicle tax. The list price of the vehicle when it was bought will be taken into account, so even if you manage to negotiate a discount, the regulations still apply.
If a vehicle has a list price of more than £40,000, in the first year the rate of tax will be based on the C02 emissions. After the first year, the VED tax is calculated on the fuel type of your vehicle, plus an additional rate of £310 per year for the next five years.
If you’ve already bought a car before April 1st 2017, then you’re not going to be effected by these regulation changes. Your current tax rates will continue to be calculated using the older system.
This means that ultimately you’ll be better off compared to those who have bought the same model since the new regulation changes.
What impact do you think that these changes are going to have on the future of the motoring industry? Do you think they’re going to have a negative effect on sales, or do you think consumers will continue to buy new vehicles?
We’d love to hear your thoughts, so let us know in the comments below. Alternatively, you can continue the discussion on social media; you can find us on Facebook here and on Twitter here.
You can also find out more information about their VED tax changes by reading this fact sheet created by the BVRLA.
