Thinking of buying a new car? Here are some important changes to car tax, effective 1st April 2017, we think you should know about...
Government changes to VED (Vehicle Excise Duty), commonly known as car tax, are coming in April. So if you’re looking to buy a new car the below information may help save some money….
WHAT CHANGES ARE BEING MADE TO VEHICLE EXCISE DUTY?
The current amount of car tax we pay depends on what VED tax band our vehicle falls into, with each band being defined by CO2 emission levels. People who own low emission vehicles pay less tax, or no tax for some vehicles, those who drive high emission vehicles pay more.
However, in 2015, the government announced a change in the car tax system meaning that only hydrogen and electric cars are exempt from paying car tax. All other cars will be charged a one-off first year payment, moving to an annual standard flat rate of £140 from year two. Statistics show the standard rate will affect an estimated 95% of new car owners.
In addition to the flat rate payment, cars that cost over £40,000 will be required to pay an additional £310 for the first five years, a total of £450 per year.
WHEN WILL THESE CHANGES TAKE EFFECT?
The changes will take effect for new cars bought on or after April 1st 2017. Those who take delivery of a new car in March, will not be charged under the new rates.
WILL THE CHANGES AFFECT THE AMOUNT I PAY FOR MY EXISTING CAR?
No. The existing VED rules will only apply to cars registered on or after April 1st and therefore will not affect the tax rate for your existing car.
WHO WILL BE AFFECTED THE MOST?
unless buying a zero emissions car under £40,000 all buyers of newly registered cars after 1st April 2017 will be affected in some way. It is also important to note that although zero emissions vehicles have a £0 standard rate, owners of zero emission vehicles valued at over £40,000 will be required to pay the additional rate of £310 per year for the first five years .
The biggest impact will therefore be on buyers of cars with below 100 g/km of CO2 emissions who would ordinarily pay very little or no tax at all. These low-emission petrol, diesel and hybrid cars are currently exempt from VED. Calculations suggest that these drivers could pay up to nearly nine times the amount that they currently pay.
Here is some further reading on the subject that we think you may find useful...