Thinking of purchasing a new car? Cars registered before 1st April 2017 are unaffected by the new tax charges. So now is the best time to buy.
As of 1st April 2017, the way in which Vehicle Excise Duty (VED), also known as road tax, is calculated will be changing. Under the new scheme road tax will no longer be calculated based soley on the CO2 emissions, engine size and fuel type of a vehicle.
Cars which are registered from 1st April 2017 onwards will be subject to the new regulations. The only new vehicles which will be exempt from the new tax conditions are cars registered before 1st April 2017, commercial vehicles, HGV's, motorbikes and zero emissions vehicles under a list price of £40,000.
As a result of these changes which are detailed below, cars registered after the 1st April 2017 will incur higher tax rates. If you've been thinking about a brand new car, now is the perfect time to buy and save some money before these new tax changes apply.
Tax Changes Booklet
Currently, depending on the registration date of a vehicle, the existing system calculates road tax based on the engine size, fuel type and CO2 emissions produced. Owners of vehicles which emit more than 100 g/km of CO2 are required to pay road tax and the more carbon dioxide a vehicle produces, the higher the road taxes will be. However, vehicles which emit under 100 g/km of CO2 do not have to pay road tax.
Under the new road tax scheme, in the first year of registration the charges will be based on the CO2 emissions bandings that are applicable to the car. So if you want to keep running costs to a minimum it's wise to consider vehicles with lower emissions. After the car's first year of road tax, a flat rate of £140 applies. The only exceptions are if the car has a list price in excess of £40,000 or if it has zero emissions and is below £40,000. The table below outlines the differing changes.
The new road tax scheme will operate as a three-tier system indicating which vehicles will be taxed at which rate.
Tier 1: Zero emissions vehicles under £40,000 are exempt from the new tax.
Tier 2: Petrol and Diesel engines with a list price of up to £40,000 and emit 1g/km CO2 and above will be charged at the new road tax rate of £140 from it's second year of ownership.
Tier 3: Petrol and Diesel engines with a list price of £40,000 and above (including electric vehicles) which emit 1g/km CO2 and above will be charged at the new road tax rate of £450 after the first year of ownership for year 2 through to year 5. This charge will decrease to the standard rate of £140 from year six onwards.
If a new car has been on your radar, we would advise you to act before these changes come into place, that way you will be not be affected by the rising costs. Or, if you haven't already considered an electric vehicle now may be the best time. Read our blog to discover the best green cars you can buy or visit your local Evans Halshaw to enquire.
Act now and beat the rising road tax.
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