The impact of car tax changes

26/03/2017

new car tax

This spring, seven out of ten new car buyers will pay more road tax as cars once considered ‘green’ are squeezed for more money. Revised Vehicle Excise Duty tax bands on new cars bought from April 1 will add more than £500 to the long-term running costs of Britain’s most-popular and eco-friendly new cars. However, those who already own green cars, or buy them before April 2017, will not be affected and will remain on the current tax scales.

By contrast, buyers of some gas-guzzlers vehicles will receive ‘significant benefits’ and could save up to £245 under new zero and standard tax bands, according to consumer website Honest John.

The changes to vehicle excise duty have been criticised by motor industry experts as 'unfair and perverse'. But these controversial new-car road ‘reforms’ will kick in from April 1, a month after the introduction of the 17 plate registrations in March.

The reforms have created a rush by some drivers to buy their new cars before the new rules take effect. But some are being thwarted by delays in deliveries of some of the newest and greenest vehicles.

What changes?

Currently, vehicles that emit less than 99g/km qualify for zero Vehicle Excise Duty for the first year and pay nothing for every year after.

However, from 1 April 2017, the Government will replace the current sliding-scale 13 band tax system with three new bands - zero, standard and premium.

Zero will apply only to zero CO2 emissions cars

Standard will apply to other cars (£140 per year)

Premium will be an extra five-year surcharge for new cars costing more than £40,000 (£310 per year).

The new road tax regulations mean that all new cars will face a significant hike in their car tax amount in the first year of registration depending on CO2 emissions, after that it's a flat rate of £140 per year.

Unlike the current system, where low-emission petrol and diesel cars are tax exempt, the new VED system will only be free for vehicles with no tailpipe emissions - that means electric and hydrogen cars only. Owners of higher polluting cars will still pay more under the new laws but in many cases, not as much more as people buying lower powered cars.

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