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Car Tax changes April 2017

New car tax rates will be introduced next year for vehicles registered on or after 1 April 2017 (also known as Vehicle Excise Duty or VED).

Currently (for cars registered after 1st March 2001) there are 13 bands each with a different tax rate. With the new rates, 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 three bands are:

  1. zero emission
  2. standard
  3. premium

 

What will you pay?

 

A zero-emission car will pay no tax whatsoever, unless it costs more than £40,000.

Standard cars will pay £140 from the second year onwards.

Premium cars that cost more than £40,000 will have a tax rate of £450 from the second year. This is for the first 5 years, after which the tax will drop to the £140 standard rate.

Here is our chart showing the current tax rates and the new rates effective from the 1st April 2017:

Tax Rates Graph

 

 

From 2017, the only cars that will be free to tax will be fully electric cars that cost less than £40,000. Owners of low-emission hybrid vehicles that are currently tax free will have to pay the standard rate.

 

 

It is important to remember these changes won’t apply to your current car, only new cars registered after the 1st April 2017.

What do you think about the new 'Road Tax' scheme? Let us know your comments below or share with us on Twitter or Facebook.

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