By: Alice Nicolson
Did you know the current Vehicle Excise Duty (VED) bands are changed on April 1 2017? Well you’re in luck, we have all the information for you.
For some people, the car tax changes are positive, meaning you might save money if you buy a car after April. For others, however, the new car tax rules mean they should make the most of the current regulations.
The current car tax bands were set back in 2001 when the average CO2 emissions were 178g/km. The average CO2 emissions are currently 122g/km, so there should be lower target. About a quarter of drivers currently don’t pay any car tax because their cars emit less than 100g/km of CO2. The new rules are a bid to lower the average to 95g/km.
These new car tax bands only apply to new cars registered after April 1, so if you’re thinking of buying a new car this year, you need to be up-to-date.
Every motor vehicle that uses the roads has tax their vehicle through the DVLA. Even if the car is exempt from tax, you still have to register your car.
Vehicle Excise Duty (VED) is more commonly known as car tax or road tax. Referring to VED as ‘road tax’ can be confusing, because road tax was abolished in 1937. It’s a common misconception that motorists pay directly for the use/condition of the road. VED is about taxing the vehicle, rather than having rights to be on the road.
The way the DVLA determine the amount of tax that’s paid on a certain vehicle has changed throughout the years. Before March 2001, the amount was based on engine size. After March 2001, the rate was based on fuel type and CO2 emissions. In April 2010, ‘First Year Rates’ came in, meaning the amount paid for the first year of ownership is different than the following years
To lower the average CO2 emissions and make the system fairer, the new VED bands in April will change the rates again.
In short, if the car you want to buy is expensive or has a small engine with less than 100g/km emissions, you might want to get it before the changes come into effect.
At the moment, one of the perks of having a small car with a small engine is the low road tax. In April 2017, that might not be the cause. Currently, if your car emits less than 100g/km of CO2, you don’t pay any road tax on your car. So cars like the Hyundai i10 for example, are cheap to run and free to tax. But when the car tax exemption regulations come in, only 0g/km vehicles don’t have to pay. So the car has to be electric.
It’s not just small cars, either; there are many cars that emit less than 100g/km of CO2. For example, the Vauxhall Astra and Insignia both have low CO2 variants available.
After the first year, under the new car tax rules, every car that emits any CO2 will have to pay a standard rate of £140. So for car owners who are used to paying little-to-no road tax, might feel the pinch.
To make the system fair, it’s believed that if a person can afford an expensive car, they can afford to pay more tax. So, even electric cars that cost over £40,000 are going to be expensive. Anyone who owns a car over this amount will be charged £310 a year for the first five years, even if the car is emission free.
If the car is over £40,000 and emits CO2, the owner will have to pay the standard rate £140 as well as the £310 for the first five years. That’s over £2000 overall for the first five years.
If you have a car that emits over 140g/km or more and you buy it second-hand after April 1st, you’re going to save money. A second-hand Jeep Wrangler with a 2.8-litre engine, currently costs £500 a year to tax, but after the changes you only pay the standard rate (£140).
However, if you’re buying it new, you might be met with a hefty price for the first year. If you were to buy the same Jeep Wrangler new after the tax changes, the first year will cost you £1700; it currently costs £885 for the first year. After the first year you will save money and in the long run, but it depends whether you have that money at the time of purchase.
Ultimately, it depends on what car you’re thinking of buying. But if you’re thinking of buying a second-hand car, with high CO2 and costs less than £40,000, you should wait till after the change. So, it’s not all doom and gloom.
As you can see after reading this article, the changes to VED will vary from car to car. If you’re buying a new car, it might be expensive to tax in the first year but then go down to a lower rate than you’re paying now. If you’re looking to buy a new or used car with less than 100g/km CO2 or costs more than £40,000, you should buy it before April.
If you’re looking to buy a new or used car after April 1, you need to assess how much you’re paying and whether you’ll be saving any money if money is an issue for you.
Please note we record all our calls to ensure that we give you the service you deserve.
We also share information about your use of our site with our social media, advertising and analytics partners
who may combine it with other information that you’ve provided to them or that they’ve collected from your use of
their services. You consent to our cookies if you continue to use this website.
Some of these cookies are essential, while others help us to improve your experience by providing
insights into how the site is being used. For more detailed information on the cookies we use, please
*Your browser is currently set to 'Do Not Track' and therefore some options have been disabled. Please adjust your browser settings to enable these options to be chosen.
The website cannot function properly without these cookies, and can only be disabled by changing
your browser preferences.
These cookies allow our website to remember information that changes the way the site looks or behaves,
so that you can personalise your experience.
We use statistic cookies to monitor page traffic on our website. This information enables us to improve
the website for visitors.
Social cookies allow us to track visits from our social pages and may be used to target adverts based on your social media preferences.
These cookies allow us to understand general customer behaviour and track where you have visited from,
which allows us to monitor the success of our marketing campaigns.
Cookies are small text files that can be used by websites to make a user's experience more efficient.
The law states that we can store cookies on your device if they are strictly necessary for the operation of this site. For all other types of cookies we need your permission.
This site uses different types of cookies. Some cookies are placed by third party services that appear on our pages.
Your consent applies to the following domains: www.stoneacre.co.uk
Cookies are used to analyse web site traffic and are commonly used on the internet to make your browsing more efficient by remembering your preferences and tailoring its operation accordingly. Please be aware that cookies do not harm your system.
These cookies do not give us access to any personal information and although most webs browsers allow cookies they can be turned off if you wish by using your “help” facility. This may prevent you taking full advantage of our web site.