Your Simple Guide To The VED (Road Tax) Changes

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Your Simple Guide To The VED (Road Tax) Changes

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.
  • 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
    Figures Correct At Time Of Publication
  • 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
    Figures Correct At Time Of Publication

    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.

     

Notes to Editor:

Figures correct at time of publication.

Article by
James Reeve
James Reeve
Marketing at Pentagon Group
Email: info@pentagon-group.co.uk
10 months ago