There are some major changes due to affect the cost of road-tax in the next few months. Here's everything you need to know…
You might not know this, but you could be hit with extra charges from April as a result of the new road-tax system being introduced by the DVLA.
Results from Carbuyer’s recent survey have revealed that 90% of consumers are unaware of the forthcoming road-tax changes which will affect all new cars sold from April.
The significant changes could place a burden on motorists with an additional cost of hundreds of pounds to their annual tax bills.
What are the 2017 changes exactly and who will be affected?
Well, if you are currently exempt from road tax, or Vehicle Excise Dutry (VED) because your car emits less than 100 grams per kilometre (g/km) of carbon dioxide (CO2), this will change in April costing you £140 per year.
The changes apply to all new cars registered after April 2017, and only those that produce ZERO emissions – no CO2, fully electric and hydrogen cars – will NOT have to pay road-tax. All other models registered from that date will see an additional cost based on its CO2 emissions, from £10 to £2,000.
The VED reform will affect many different vehicles from small city cars to large hybrid cars. Only cars with zero emissions will not pay the standard rate of vehicle tax. However, if a car’s list price is over £40,000 at first registration, the customer will pay the additional rate for five years after the end of the first licence.
How will the new 2017 VED bands be calculated?
TABLE: VED bands and rates for cars first registered on or after 1 April 2017
|CO2 emissions (g/km)||First Year Rate||Standard Rate*|
*Cars with a list price of over £40,000 when new pay an additional rate of £310 per year on top of the standard rate, for five years. Data provided by DVLA.
CURRENT VED RULES
VED is based on the CO2 emissions of the vehicle
The higher the CO2 emissions of the vehicle the more VED is due
There is one rate for the first year (First Licence Rate) and another for the second and subsequent years (Standard Rate)
NEW VED RULES
From April 2017, all newly registered vehicles with zero emissions will be exempt from the standard rate of vehicle tax
All other vehicles will pay a standard rate of £140 a year
An additional rate of £310 will be added to the vehicle tax for all new vehicles with a list price of over £40,000 – payable each year for 5 years from the end of the first vehicle licence.
After the additional rate expires it will revert back to the standard rate of £140 per year
What about cars that are already registered?
Cars bought before 1st April 2017 will not be affected by the new tax reform as they only apply to cars registered on or after that date.
Road-tax will continue to be calculated using the current system based on CO2 emissions, which means there are more chances of customers saving money by purchasing now rather than later.