In 2015 the Government announced that the way in which they charge Vehicle Excise Duty (VED), also known as Road Tax, Car Tax, Road Fund License (RFL), the Tax Disc, Car duty – would change from 1st April 2017 across the UK. This is known as ‘VED Reform’ and the DVLA will implement the change for all new car registrations from 1st April 2017.
Under the new system, the first year of tax will remain based on partly CO2 emissions, but after that, all cars (aside from fully electric and hydrogen fuel-cell vehicles) will cost a flat rate of £140 a year to tax.
Furthermore, cars with a list price (after options) of over £40,000 will be subject to an additional £310 levy - this extra cost is only applicable for the first five years of the car’s life.
NB: It will NOT apply retrospectively to vehicles registered before that date.
How will it affect me?
Cars registered before 1st April 2017:
If a car was registered before the 1st April 2017, this car will remain on the current tax band structure and will not be affected by the change.
For example if you purchase a used car after the 1st April 2017 but it was registered before 1st April 2017, the current tax bands will remain and you will not be affected when you come to tax it every year annually.
Cars registered after 1st April 2017:
If a car was registered after the 1st April 2017, this car will be on the new tax band structure as below.
If you own the car over 3 - 5 years this could end up costing you hundreds more in road tax than if you buy and register it before 31st March 2017.
So if you are thinking about buying a new car this year, now could be the best time to buy as it might cost more to tax from April on.
The Rates explained
Find your vehicle’s CO2 bracket and compare how much extra you’ll pay from the 1st April 2017.
|CO2 bracket (g/km)||Current first year rate||NEW first year rate||Current tax rate||NEW tax rate*|
|More than 255||£1,120||£2,000||£515||£140|
*Cars with a list price of over £40,000 (after extras) pay an additional
rate of £310 per year on top of the standard rate, for five years.
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