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VED System Changes - What They Mean

Tue, Mar 14, 2017 8:06 PM

If you thought the switch to driving around without having to display a tax disc was a pretty big deal, changes coming in from 1 April will make that seem like small potatoes.

From that date, the system of vehicle excise duty - which most of us know better as road tax - is being completely changed.

The changes, though, only apply for cars registered after 1 April. After that date, Whatcar.com explains, a new level of charges, based on 13 different CO2 bands, will determine how much road tax you pay in the first year of ownership. But only zero-emission vehicles, such as electric cars, will fall into the lowest band and therefore be tax-free.

It all means lots of new cars with small engines and low CO2 emission figures of up to 99g/km in particular will be liable for the tax for the first time.

And the only cars which won’t be liable for any road tax throughout their lives will be those with zero CO2 emissions.  

 

The Easy Bit

 

If you’ve already bought and had your car registered, even if you haven’t yet taken delivery, you won’t be affected by the changes. They only apply to new cars which are bought and registered after 1 April.

Bigger changes are afoot, though, to the level of road tax charged for the first year of the car’s registration. There’s a full explanation of the details on the official government website here.

The cost to licence a new car for the first time after 1 April will, in all cases except where it produces no CO2 emissions, be higher than before that date.

 

Where It Gets Complex (And Costly)

 

To make things a little more complicated, there is also a new, higher rate of road tax payable for the first five years of the life of a car with a list price of over £40,000 (Note: this is the list price - not the price you actually pay - so even if you haggle the purchase price down to below this threshold, you won’t benefit from lower tax costs).

If your vehicle costs over £40,000 at first registration, you will pay £450 a year for each of the first five years to tax it, made up of the £140 standard rate, and a £310 additional rate. After five years the road tax will revert to the standard rate of £140 per year.

There’s a thread on the Pistonheads.com website which discusses the changes, and which also notes, for clarity: “The list price of vehicles subject to the scheme must be provided when the vehicle is first registered,” and “this list price will be provided by the manufacturer or dealer/retailer and reflect the vehicle list price on the day before it is first registered and taxed.”

 

What This Will Mean For You

 

If you buy a new vehicle and it’s registered on or after 1 April 2017, at the end of its first year on the road, unless it’s zero-emissions, you will have to pay the new standard rate of road tax of £140 a year.

Even if you buy a car with a list price exceeding £40,000 with zero emissions (including electric), you won’t escape having to pay the additional £310 a year for the five years after the vehicle was first registered. But after this, any vehicle in this category will be liable for zero road tax.

Alternative fuel vehicles will continue to receive a £10 reduction on road tax rates.

Essentially, unless your new vehicle is zero emissions, you’ll have to pay between £10 and £2,000 in the first year of registration to tax it, followed by a flat annual rate of either £140 - or £450 if your vehicle’s official price was above £40,000 - in years two to five, then £140 again after that. The full list of scales is in the chart below.

 

The Breakdown

 

This chart shows the full tax rate bands for vehicles according to their CO2 emissions (this assumes in all cases that they cost less than £40,000, so aren’t liable for the £310 additional first five years charge):

CO2 (g/km) First year VED Second and subsequent years VED
0   £0   £0 
1-50 £10 £140
51-75 £25 £140
76-90 £100  £140
91-100 £120 £140
101-110  £140   £140
111-130  £160  £140
131-150   £200   £140
151-170  £500   £140
171-190  £800   £140
191-225  £1,200  £140
226-255   £1,700 £140
Over 255 £2,000   £140

         
If you buy a hybrid, such as a Toyota Prius, or petrol-electric Yaris, Auris, C-HR and RAV4, you’ll also get a £10 discount on both the first-year and standard rates of VED payable every year after.

 

Ways To Pay

 

The good news is that you’ll still be able to break down the way you pay for your road tax in the same way as now - annually, six-monthly (for a 10 per cent surcharge) or by monthly direct debit (5 per cent surcharge).

You’ll get a reminder from the DVLA when your tax is due, unless you are paying by direct debit in which case it will continue to take your money and automatically renew your road tax until you tell it that you’ve got rid of your car.

Current penalties for non-payment of road tax also still apply - you could be landed with a fine, have your car clamped, impounded or even crushed. So it’s best to just factor the cost of road tax into all of your car’s other running costs.

 

A Reassuring Helping Hand

 

If all this seems a bit daunting, don’t worry. Here at Oakmere Motor Group, all our sales staff have been revising those emissions tables like mad for the last few weeks. So they can explain what it all means for you when you buy a car from us in plain English.

But the basics you need to know are just:

  1. The CO2 emissions figure, and

  2. Whether the car costs more than £40,000

If you’re quick, and head down to Oakmere Motor Group’s showroom on Manchester Road, Northwich before the change takes effect, you’ll find all our vehicles marked with the amount you can save over the first three years of your new car’s life if you get in soon and have your car registered before 1 April.

Remember that these changes will apply to all newly-registered cars from 1 April onwards. So if you’ve been putting off buying a new car for a while, you’ve got just a few more weeks before could find that your hesitation is costly!                       

 

Come and see us at Oakmere Motor Group in Northwich if you want to make a Toyota, Mazda, Lotus, Morgan, Caterham or TVR your next new car. We’re the appointed dealers for the area for all these makes, and are proud of our high levels of customer service and workmanship, which help ensure that all your car servicing and maintenance is carried out to the highest standards.

 

 

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