Vehicle Excise Duty - Changes 1st April

Vehicle Excise Duty (VED) is also known as 'vehicle tax', 'car tax', or 'road tax'. 

Vehicle tax rates are based on engine size, or fuel type and carbon dioxide (CO2) emissions, depending on when the vehicle was registered.

During the 2015 Budget, the Chancellor of the Exchequer announced major changes to the Vehicle Excise Duty (VED) regime for all new cars registered from 1 April 2017. This will be a significant change for many car owners.

The existing VED system, for all cars registered after 1 March 2001, is based on 13 CO2 bands with a first year rate and a standard rate thereafter.

The new system, coming in to force from 1 April 2017, maintains the escalating first year rate based on the CO2 band structure.. However, the standard rate will be a single flat amount of £140 for all vehicles, with the exception of zero emission cars and high cost vehicles. For high cost vehicles, that is vehicles with a list price of more than £40,000, a supplement has been introduced to the standard rate for the first five years in which a standard rate is paid. This additional supplement of £310 applies to all vehicles with a list pice of more than £40,000. In summary,;

  • The first year rate will be based on official CO2 figures.
  • A flat standard rate of £140 will apply to all cars except those releasing 0 grams CO2/km for which the standard rate will be £0.
  • An extra charge of £310 a year will apply to cars with a list price over £40,000 in the first 5 ‘standard rate years’.

As an example of the impact, let's take the Range Rover Evoque ed4, lower emission, engine.

If registered on 31st March 2017, then the year one VED is £0 with an annual standard cost of £30. If registered on or after 1st April 2017, then year one is £160 and the standard rate £140. Add a few extras, so over £40,000 list price, then add £310 per year, whatever the emission rate!

Vehicles registered prior to 1 April 2017 will not be affected at this time.

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