Vehicle Tax Rate Changes 2017

Vehicle tax rate changes 2017

This only affects cars registered after 1 April 2017

Last year’s Budget Osborne made some radical changes to the way the UK tax’s cars. This is known as Vehicle Excise Duty or VED for short. The new regulations will come into place on 1 April 2017 and are going to hit the pockets of people buying expensive cars. In a way that is similar to the old tax rates, the tax will still be partially calculated on the CO2 emissions, however new cars will be divided into 13 emission groups which will be used to be used to calculate how much VED you pay in the first year of ownership. Only cars with zero emissions now will be in the lowest band and therefore tax free, but going forward after the first year, only zero emissions car that cost less than £40,000 will be tax free. Otherwise there will be a flat rate of £140 a year for all petrol and diesel cars with a cost of less than £40,000.

Any car with a cost of more than £40,000 will also pay a premium rate after the first year of £310, so will make the petrol or diesel cost £450 a year in total. This even means that fully electric cars that produce zero emissions will be liable to VED of £310 a year from the second year onwards if they cost more than £40,000. To keep in mind this £40,000 is the cars final list price, which includes optional extras but ignores any discount received from the dealer. 


If you wish to compare to the previous tax rates you can do so here -

Before anything less than 100g/km would be tax free though!

Should you wait until after April? Well this would depend on if you are looking at some electric cars like BMW i3 or Renault Zoe then it could be worth the wait. However if it was a Tesla then you will be looking at paying the £310.00 premium rate a year after the first year tax free, if you purchase it after the new rules are in force. The hardest hit cars are the ones in the 91-100g/km bracket, as they used to be tax free but post April will be subject to a £120 first year cost.

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