The way Vehicle Excise Duty (VED) is calculated is changing for new vehicles registered on or after 1 April 2017. Any vehicle registered before this date will not be affected.
Under the outgoing VED system most new car buyers were paying very little, sometimes nothing, in the way of road tax, which has cost the government millions of pounds annually. This means that all new cars registered with the DVLA from April 1st 2017 will face an increase in tax during their first year of registration, and from the second year onwards a standard rate of £140 per annum will apply. There is a new five - year supplement to pay for cars costing more than £40,000.
Cars with alternative fuels, for example a hybrid or a car that runs on LPG, will cost £10 less in the first year and £130 thereafter.
The new system will only be free for vehicles with no tailpipe emissions, for example electric and hydrogen cars.
If the vehicle is registered before the deadline, the existing VED band will remain the same, meaning cars registered before April 1st will continue on current rates even after the new bands come into force.
Vehicles included in the new system
|Category M1 Special Purpose (M1SP)|
|Category M1 (M1G)|
VED bands and rates for cars first registered on or after 1 April 2017
|CO2 emissions (g/km)||First yearly 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.