Vehicle Excise Duty for cars is changing – are you prepared?

VED Reminder
Posted Posted on Categories Company CarsTags

From April 2017, the UK car tax system will undergo a major change with new Vehicle Excise Duty (VED or car tax) rates across the board. A lot of vehicles which previously attracted £0 VED will now be affected.

Under the new system, cars are divided into three bands. CO₂ emissions still divide cars into one of 13 bands but this only applies to first year tax costs. From the second year onwards, the three band system takes over.

The new VED bands will apply to all cars registered from 1 April 2017 onwards. A CO₂ based rate will still mandate the first year fee – but only zero emissions vehicles will be exempt from the tax. Cars registered before 1st April 2017 will continue to be taxed under the old system.

After the first year, a flat fee of £140 applies for all vehicles not categorised as zero emissions. The revenue from the revised VED scheme will flow into a new road fund for road repairs and maintenance.

Cars registered on or after 1st April 2017

For cars registered from 1st April 2017, the following rates will apply.

CO₂ emissions Standard rate First year rate
g/km £ £
0 0.00 0.00
1–50 140.00 10.00
51–75 140.00 25.00
76–90 140.00 100.00
91–100 140.00 120.00
101–110 140.00 140.00
111–130 140.00 160.00
131–150 140.00 200.00
151–170 140.00 500.00
171–190 140.00 800.00
191–225 140.00 1,200.00
226–255 140.00 1,700.00
Over 255 140.00 2,000.00

The first time a vehicle is taxed on or after 1 April 2017 with a value of more than £40,000, you’ll pay the rate based on CO2 emissions.

After the first 12 months, you’ll pay a rate based on the fuel the vehicle uses and an additional rate of £310 a year for the next 5 years.

What about cars that are already registered?

If you lease or purchase your car before 1st April 2017, you won’t be affected by these changes, because they only apply to cars registered on or after that date.

Your tax will continue to be calculated using the old system of CO₂ emissions, meaning that in the vast majority of cases you’ll be better off.

A few examples of how it will work…

 

Tesla Model S

Tesla Model S

List price: £46,900 CO₂ emissions: 0g/km

First year tax rate under current legislation: £0

Standard tax rate under current legislation: £0

Cost over three years: £0

£0 tax in year 1, 2 and 3 (standard rate for zero emission)

Premium car supplement in years 2 and 3: £310 per year

Cost over three years: £620

Vauxhall Astra 1.4i 16v SRi 5 Door

Vauxhall Astra

 

List price: £18,045 CO₂ emissions: 127g/km

First year tax rate under current legislation: £0

Standard tax rate under current legislation: £110

Cost over three years: £220

First year tax rate from 1st April 2017: £160

Standard tax rate from 1st April 2017: £140

Cost over three years: £440

Mitsubishi Outlander PHEV GX3h

Mitsubishi Outlander PHEV GX3h

List price: £31,749 CO₂ emissions: 42g/km

First year tax rate under current legislation: £0

Standard tax rate under current legislation: £0

Cost over three years: £0

First year tax rate from 1st April 2017: £10

Standard tax rate from 1st April 2017: £140

Cost over three years: £290

Renault Zoe Dynamique Nav Rapid Charge

Renault Zoe Dynamique Nav Rapid Charge

List price: £16,045 CO₂ emissions: 0g/km

First year tax rate under current legislation: £0

Standard tax rate under current legislation: £0

Cost over three years: £0

First year tax rate from 1st April 2017: £0

Standard tax rate from 1st April 2017: £0

Cost over three years: £0

 

Should I wait until 1st April 2017 to lease or purchase my new car?

If you lease or purchase your car before 1st April 2017, you won’t be affected by these changes, because they only apply to cars registered on or after that date.

Your tax will continue to be calculated using the old system of CO₂ emissions, meaning that in the vast majority of cases you’ll be better off.

If you have any lease vehicles which are soon due for replacement, it is worth considering arranging replacement vehicles to avoid these changes in the short term.

For more information on Days Fleet can help with your requirements, contact us at [email protected] or call us on 0345 815 0019