In the market for a new car? You need to know about big changes to car tax bands.
In April 2017 Vehicle Excise Duty (VED) or road tax as most of us know it is changing and in a way that indicates a change in government policy (unless you believe that all government tax policy is simply about raising as much cash off the poor taxpayer as possible anyway) as it’s a move away from Co2 based charging after the first year..
It’s a change that will simplify the tax bands but will mean higher costs than at present for motorists that choose low emissions cars and lower charges for those that don’t which is surprising based on tax policy in recent years which has set out to drive us into more environmentally friendly cars.
The first years charge will, as now, be based on a scale relating to Co2 and will be punitive for polluting cars and concessionary for efficient motors although the bands and actual rates are changing.
From year two onwards though, other than zero emissions vehicles which will continue to pay nothing, all cars will have a flat £140 annual charge and cars costing over £40,000 even if they are zero emissions like Tesla’s Model S will pay an additional £310 per year from years 2 to 5.
So if you choose to drive a car that’s good for the environment or one that costs more than £40,000, this could be bad news for you. The good news, though, is that these changes are not retrospective. Cars registered before 1st April 2017 will have the current scheme applied for the life of the vehicle (unless the policy on this aspect changes in the future). This means, if you are able to, you could order a car soon and ensure it’s delivered before April and lock into the current regime. If you are after a gas guzzler though, waiting and arranging delivery after April might save quite a few quid.
If you like full details on the changes and some examples, this article in Which? Magazine www.which.co.uk/reviews/cars/article/car-tax-explained is very helpful.
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