New rules for VED (Vehicle Excise Duty) will be enforced for cars registered from 1 April 2017 onwards.
First year rates of VED will vary according to the carbon dioxide (CO2) emissions of the vehicle.
A flat Standard Rate (SR) of £140 will apply in all subsequent years, except for zero emission cars which will pay no Tax.
Cars with a list price of £40,000 will incur a supplement of £310 on the SR for the first 5 years in which a SR is paid.
All cars registered before 1 April 2017 will remain in the current VED system.
So, will it be better to wait until 1 April or is it more cost effective to change cars before the new regulations come into force? The answer to this is entirely dependent on your planned vehicle and more importantly its CO2 emissions.
Under the current system low-emission petrol and diesel cars are tax exempt, but with the new VED system only vehicles with no tailpipe emissions (which means electric and hydrogen cars) will be free. And that's not all, a new five-year supplement comes into force 1 April to pay for cars costing more than £40,000.
|VED car tax bands for cars first registered from 2017 onwards|
|Emissions (g/km of CO2)||First year rate||Standard rate|
|Cars above £40,000 pay £310 annual supplement for five years|
The rule changes have been designed to net the exchequer more money from popular eco-friendly cars and it is these cars that the new rules will hit hardest.
A car that is CO2 rated at 100g/km or lower (and free of road tax for life under the current VED system) - will cost its owner £400 over 3 years, £680 over 5 years and £1,380 over 10 years.
If you can buy the same car before the 1 April deadline, you can see the amount you will save.
For more information on this new taxation and how it applies to your next new car, please contact our sales team