Changes to road tax VED from April 2017

[Joss max]

I have just read up on the Governments changes to road tax VED due to come into force on the 17th of April 2017

What you need to know

Road tax – or, by its proper name, Vehicle Excise Duty (VED) – is set for some big changes next year. The reforms were announced in the 2015 budget, and although they'll only affect cars newly registered with the DVLA from 1 April 2017, all drivers should understand them.

What does newly registered mean?

All cars need to be registered with the DVLA before they go on the road. Used cars have already been registered (and have the VC5 papers to prove it), but vehicles that have been built, imported, rebuilt or bought brand new haven’t. So if you buy a new car on 2 April 2017 these changes will apply; if you buy second hand they won’t.

• Why is the system changing?

  In 2015, former Chancellor George Osborne highlighted that without an overhaul of the current system, around 75% of new cars would be eligible for free road tax by 2017. According to Osborne, a steady revenue from vehicle tax is needed to fund essential road maintenance throughout the UK.

  Three new bands will be introduced “to make the tax fairer, simpler and sustainable”, and to encourage people to choose the cleanest cars. They are:

  • zero (cars with no emissions);
  • standard (most vehicles); and
  • premium (cars costing £40k or more).

  First year and fixed rates

  Emissions will only be taken into consideration for the first year's tax bill. After that, a standard rate applies. This aims to make road tax fairer for drivers with older cars, which can be very expensive to tax under current regulations. Despite this, the cost of road tax will still depend on which band your vehicle falls under. After the first year, payment will be as follows:

  Zero

  • Cars worth less than £40k are VED free
  • Cars worth more than £40k will be subject to a £310 surcharge for the first five years

  Standard

  • £140 per year

  Premium

  • £140 per year
  • £310 surcharge for the first five years

  Who will be most affected?

  Drivers of small fuel-efficient and hybrid cars will feel the biggest impact. VED on some models will cost more than ten times as much as it does now. For example, the Peugeot 208 1.2 PureTech (82) Allure currently costs £40 in tax for the first three years. Under the new regulations, that three year total will jump to £420. That’s a 950% increase on 2016 rates. Similarly affected cars include:

  • the Ford C-Max 1.5TDCi (120) Zetec;
  • the Lexus IS 300h Hybrid auto Luxury; and
  • the VW Passat 1.6 TDI S.

  The bright side

  Sports cars and SUVs (large cars with four-wheel-drive) that cost less than £40k, and have emissions of 226g/km and above, will actually work out cheaper under the new regime. Buyers could save £600 over the first five years and a huge £2,500 over ten years under the flat-rate system. If you're planning to buy a car like this, it's worth waiting until next April.

  Date for your diary

  These changes only apply to cars first registered after 1 April 2017. If you register your new car by 31 March 2017, the updated road tax rates won't apply. The reforms also only cover privately owned cars. Company vehicles are governed under different regulations, which are also set to change.

[GaryPL]

Yep. So anyone buying a new car that's in current band C or below... Do so before April! Over a 5 year life of a car, you're looking at hundreds of pounds more being paid!

Pure government money grabbing. Which in fairness to the 90% slime, 8% weasel, 2% human George Osborne - he was honest about this time.

[Turvey]

Am I reading this right? They're going to INCREASE the rate for small, energy efficient cars and DECREASE the rates for bigger 'gas-guzzling' cars?!!! 

 

Won't that remove a major incentive for buying a small car and also remove the disincentive for buying a bigger car? Madness!!! You couldn't make it up!

[GaryPL]

4 minutes ago, Turvey said:

Am I reading this right? They're going to INCREASE the rate for small, energy efficient cars and DECREASE the rates for bigger 'gas-guzzling' cars?!!! 

 

Won't that remove a major incentive for buying a small car and also remove the disincentive for buying a bigger car? Madness!!! You couldn't make it up!

Pretty much. First year tax will be higher for high emitting cars but after that, all the same.  And current band A cars which for years have paid nothing, will soon have to pay £140 per year.  Same as a £100k supercharged V8 Range Rover.

[GMX]

3 minutes ago, GaryPL said:

Pretty much. First year tax will be higher for high emitting cars but after that, all the same.  And current band A cars which for years have paid nothing, will soon have to pay £140 per year.  Same as a £100k supercharged V8 Range Rover.

My Range Rover driving neighbour said he was delighted to see his VED drop significantly with his current Range Rover (£355), compared to his previous one (£1000) This will send him into the realms of ecstasy when he replaces that one with a new one next year.  Under this new scheme, if he kept it for two years, he'd be paying less my Focus Mk1, in his second year

[GaryPL]

3 minutes ago, GMX said:

My Range Rover driving neighbour said he was delighted to see his VED drop significantly with his current Range Rover (£355), compared to his previous one (£1000) This will send him into the realms of ecstasy when he replaces that one with a new one next year.  Under this new scheme, if he kept it for two years, he'd be paying less my Focus Mk1, in his second year

People who have money burning holes in their pockets and spend it on Range Rovers generally do get off on having even more money in their pockets! lol