Vehicles registered from the 1st of April 2017 will be taxed in accordance with both their list price and fuel efficiency. This is similar to the current method, but beware – the boundaries are tighter and lower, with the costs potentially far higher.
The First Year Rate of tax will be calculated based on the vehicle’s CO2 emissions. From the second year, most vehicles will move on to the Standard Rate of tax; an annual fee of £140 per annum. However, this doesn’t apply to everyone.
There are several bands to determine how much tax you pay, dependent on those critical emissions figures. Everyone who drives a vehicle which emits CO2 will need to pay a charge, starting at £10 for the lowest grade and raising by double, triple or even quadruple, depending on where the vehicle lands on the scale.
|CO2 emissions (g/km)||First Year Rate||Standard Rate*|
* Cars with a list price of over £40,000 when new pay an additional rate of £310 per year on top of the standard rate, for five years.
How much you pay for your vehicle will also affect your rate of VED. If you purchase a new vehicle with a list price of over £40,000 at first registration, you must pay an additional rate of £310 for 5 years; after this period, the charge will revert to the standard rate of £140.
Under the new guidelines, it’s undoubtedly cost-efficient to own a purely electric vehicle, the sector’s premium vehicles over £40,000 will still be applicable to the £310 supplement.
Vehicles covered by the new scheme will include passenger cars with at least four wheels, cars with no more than 8 seats in addition to the driver, passenger vehicles for special use (i.e. motor homes, ambulances, wheelchair accessible vehicles and hearses), as well as vehicles designed for off-road driving. Very few road vehicles are exempt.