UK Car tax changes

If you have been reading up about new vehicles in the UK, then you may have come across the changes to Vehicle Excise Duty (VED) or car tax as it is more commonly known as.

From the 1st April 2017, all new vehicles registered will be under the new rules. It is anticipated that this could mean up to 70% of drivers will pay more tax with the changes.

Up until the 1st April 2017, cars emitting less than 99g/km of CO2 would be exempt from VED, no matter how they were powered – electric, hybrid, petrol or diesel. However, with 74% of vehicles emitting under 130g/km of CO2, the government have brought in this new system.

The new system will not only be based on the emissions, but also the value of the vehicle. The owners hardest hit will be those with a Tesla, and those with a petrol vehicle emitting under 99g/km.

The magic threshold number is £40,000. Any vehicle over this figure at the time of registration will now have to pay a surcharge of £310 every year for five years. For electric vehicles, such as Tesla, this is a heavy price to pay when the vehicle emits no CO2 whatsoever.

Owners of efficient vehicles that would currently be exempt from VED will now have a much greater tax bill if the vehicle is not pure electric.

Not only will some efficient vehicles suffer, there will also be some vehicles that emit high levels of CO2 that will benefit from the new legislation.

CO2 emissions (g/km)

First year rate *

Standard rate *

0

£0

£0

1-50

£10

£140

51-75

£25

£140

76-90

£100

£140

91-100

£120

£140

101-110

£140

£140

111-130

£160

£140

131-150

£200

£140

151-170

£500

£140

171-190

£800

£140

191-225

£1200

£140

226-255

£1700

£140

Over 255

£2000

£140

All cars that have a list price of over £40,000 when new will pay an additional rate of £310 per year on top of the standard rate, for five years after the first year of registration.

*For Alternative fuel cars including hybrid, bi-ethanol and Liquid Petroleum Gas, a £10 discount applies in the first year and standard rate. See our blog on Greenways for more information about low emission vehicles.

The old system worked very differently.

Band

CO2 emissions (g/km)

First year price

Annual price

A

Up to 100

£0

£0

B

101-110

£0

£20

C

111-120

£0

£30

D

121-130

£0

£110

E

131-140

£130

£130

F

141-150

£145

£145

G

151-165

£185

£185

H

166-175

£300

£210

I

176-185

£355

£230

J

186-200

£500

£270

K

201-225

£650

£295

L

226-255

£885

£500

M

Over 255

£1,120

£515

 

Look at the following examples to see the differences.

Fiat 500, 0.9 85hp. 90g/km.
Old system: First year tax, £0; Annual tax, £0
New system: First year tax, £100; Annual tax, £140.

Difference over 5 years: +£660

 

Nissan 370Z 3.7V6. 248g/km

Old system: First year tax, £885; Annual tax: £500
New system: First year tax, £1,700; Annual tax, £140.

Difference over 5 years: -£625

 

Tesla Model S 60. 0g/km

Old system: First year tax, £0; Annual tax: £0
New system: First year tax: £0; Annual tax: £0 *£310 high value supplement per year.

Difference over 5 years: +£1,240

 

For more information on electric vehicles tax, visit our blog on Greenways.  

To find out if you may be eligible for a discount, visit the government website here

For more information on the tax changes, visit the government website here. If you have purchased a new vehicle and require insurance, call Fiveways today on 01952 812380 or email enquiries@fivewaysinsurance.co.uk.