New VED / Road Tax – Changes From April 2017 Explained

As of April 1^st 2017, road tax is changing. For many new drivers, this will mean an increase in the amount of tax they pay annually, with the only exemption from the new tax being electric vehicles with 0 carbon emissions. Find out more about the tax changes and what they mean for you when buying a car after 1^st April.

Why Are The Changes Being Put In Place?

The changes are being made to keep up with the current rate of vehicle CO2 emissions, because of current technologies – around 65% – 75% of vehicles do not pay any road tax, or pay very little. For this reason, the government hiked up the tax rates to fill the hole in the treasury being caused by lower emission vehicles paying low rates of tax.

The New Rates For Vehicles Bought On Or After 1^st April

For vehicles first registered with a new vehicle on or after 1^st April 2017, the amount paid for the first year depends on the CO2 output of the vehicle, the rates are as follows:

Following these first year rates, the rate of tax paid will be dependent on the type of fuel the vehicle uses, electric vehicles will be exempt from the tax, alternative fuel or hybrid vehicles will pay £130 per year, and petrol or diesel vehicles will pay £140.

As you can see from the above table, the amount of tax is increasing for all vehicles, unless they are fully emission free, this has drawn much criticism from hybrid vehicle owners and manufacturers, due to large increases in tax for drivers who were previously incentivised to purchase hybrid vehicles due to the low rate of tax they would be paying.

Who Will Be Affected By The Changes?

The change will affect any driver that buys a new car after 1^st of April, unless it is an electric powered vehicle. Therefore, those planning on purchasing a new vehicle soon would be urged to do so before April 1^st to take advantage of considerable savings.

For example, a diesel, petrol or hybrid car emitting 99g of CO2/kg would be free of road tax for life if purchased before 1^st April, but cost £120 for the first year and £140 per year thereafter.

Some road users may even be better off under the new tax rates, for example, someone driving a car emitting over 225g of CO2/kg would currently cost £1,120 per year in road tax, under the new rules it would cost £2,000 in the first year, then just £140 per year thereafter.

Premium Vehicle Charge – Vehicles With A Value Of £40,000+

Cars that have a value of more than £40,000 will be a subject to an additional premium fee of £310 from year 2 to year 5 of ownership – this includes electric vehicles that cost over £40,000, even though they are free from tax.

Keep Your Vehicle In Its Best Condition With Autocare

If you want to avoid these tax hikes, you’ll either want to purchase a new vehicle before 1^st April, or keep your older vehicle on the road for longer. Taking your existing vehicle for regular servicing and repairs ensures that it’s in its best condition. Give us a call on 01291 627137 and find out what we can do for you.