Your Simple Guide To The VED (Road Tax) Changes

Last Updated: 2nd Feb 2017

From 1st April 2017 the way that Vehicle Excise Duty (VED) is calculated is changing. The changes will still be based on CO2 emissions, but only 100% electric vehicles (under £40,000) will be completely exempt from road tax.

What Are The Changes?

The Government have announced that a change to VED, which is commonly known as road tax, will apply to all new cars registered with the DVLA (Driver and Vehicle Licencing Agency) from 1st April 2017. This is thought to be in response to the considerable efforts of the motor industry to reduce the carbon emissions from cars which has resulted in a significant fall in tax revenue from VED charges in recent years. The changes mean vehicles that produce as little as 1g of carbon dioxide (CO2) per km will have to start paying road tax under the new system.

How Could The Changes Affect You?

If you are driving a vehicle registered before 1st April 2017 the changes won’t affect you at all. These changes will only affect drivers who are driving a vehicle registered on or after 1st April 2017.

Here’s a quick summary of all the changes you need to be aware of:

  • Drivers of petrol, diesel and hybrid vehicles must pay road tax, with the first year’s VED starting from £10. 100% electric vehicles (under £40,000) will continue to be completely exempt.
  • There will be flat road tax fee of £140 for each year thereafter (unless you own an electric vehicle).
  • Vehicles with a list price over £40,000 will also be subject to an additional charge of £310 per year for the first 5 years. This charge also applies to electric vehicles over £40,000.
  • Alternative fuel vehicles will continue to receive a £10 reduction on vehicle tax rates.

5 Years VED Costs Pre April 1st 2017

CO2 Emissions (g/km) Year 1 Year 2 Year 3 Year 4 Year 5 5 Year Total Cost
0 £0 £0 £0 £0 £0 £0
01-50 £0 £0 £0 £0 £0 £0
51-75 £0 £0 £0 £0 £0 £0
76-90 £0 £0 £0 £0 £0 £0
91-100 £0 £0 £0 £0 £0 £0
101-110 £0 £20 £20 £20 £20 £80
111-120 £0 £30 £30 £30 £30 £120
121-130 £0 £110 £110 £110 £110 £440
131-140 £130 £130 £130 £130 £130 £650
141-150 £145 £145 £145 £145 £145 £725
151-165 £185 £185 £185 £185 £185 £925
166-170 £300 £210 £210 £210 £210 £1,140
171-175 £300 £210 £210 £210 £210 £1,140
176-185 £355 £230 £230 £230 £230 £1,275
186-190 £500 £270 £270 £270 £270 £1,580
191-200 £500 £270 £270 £270 £270 £1,580
201-225 £650 £295 £295 £295 £295 £1,830
226-255 £885 £500 £500 £500 £500 £2,885
255+ £1,120 £515 £515 £515 £515 £3,180

5 Years VED Costs At New Rates After 1st April 2017

CO2 Emissions (g/km) Year 1 Year 2 Year 3 Year 4 Year 5 5 Year Total Cost
0 £0 £0 £0 £0 £0 £0
01-50 £10 £140 £140 £140 £140 £570
51-75 £25 £140 £140 £140 £140 £585
76-90 £100 £140 £140 £140 £140 £660
91-100 £120 £140 £140 £140 £140 £680
101-110 £140 £140 £140 £140 £140 £700
111-120 £160 £140 £140 £140 £140 £720
121-130 £160 £140 £140 £140 £140 £720
131-140 £200 £140 £140 £140 £140 £760
141-150 £200 £140 £140 £140 £140 £760
151-165 £500 £140 £140 £140 £140 £1,060
166-170 £500 £140 £140 £140 £140 £1,060
171-175 £800 £140 £140 £140 £140 £1,360
176-185 £800 £140 £140 £140 £140 £1,360
186-190 £800 £140 £140 £140 £140 £1,360
191-200 £1,200 £140 £140 £140 £140 £1,760
201-225 £1,200 £140 £140 £140 £140 £1,760
226-255 £1,700 £140 £140 £140 £140 £2,260

Cars priced at more than £40,000 (MRRP, including options) will also be subject to an additional £310 supplement per year, for five years, after the first year.

So What’s The Verdict?

It looks like the changes will mean higher costs for most new car owners, but there are a couple of silver linings. For example, if you want a powerful, higher CO2 car that is relatively cheap (like a Nissan 370Z for example), your annual VED bill could be lower if the model you’ve chosen costs less than £40,000.

Another positive is that the government has said that the extra money raised will actually be spent on the roads we all use. Previously, road tax simply went into the treasury’s coffers.

So What Can I Do?

If you’re thinking about buying a new car soon it might be wise to order one soon and take delivery of it before 1st April 2017.

If you’d like to find out more about how these changes could affect you please contact a member of the team at your nearest Pentagon dealership or call us 0333 222 0424 (local rate). They will be able to provide a straight-forward explanation of how much it could cost you under the new system so you can make an informed decision about your next car.

James Reeve
James Reeve, Marketing at Pentagon Group Email: info@pentagon-group.co.uk
News Archive
X
You currently have no saved vehicles
Please wait

X Thank You!

Your enquiry has been sent and we will contact you using the details provided as soon as possible.

X Voucher Request

Please complete the form below:


Top