The vehicle excise duty (VED) is currently linked to the carbon emissions of your vehicle; the higher your emissions, the higher the tax. The idea was to encourage manufacturers to produce cars with lower emissions. Now, the government is concerned that cars are becoming too efficient which means that by 2017, 75% of new cars will not be subject to road tax at all. There will now be a new banding system for all new cars in 2017.
Vehicles registered after April 2017 will remain directly linked to CO2 emissions. At the moment cars with 0-130g/km of CO2 pay no road tax in the first year but from April 2017 cars with 110-130g/km of CO2 will be charged £160 in the first year. After that there will be no longer 13 bands linked to CO2 emissions as there will be just three ratings for road tax:-
- Zero emission cars will be free,
- Cars costing over £40,000 will be charged at a standard rate of £140 plus a £310 premium,
- For everything else there will be a flat rate of £140.
For hybrids, especially the expensive vehicles which attract very little or no road tax, the VED rate provides an incentive for these vehicles, but if you are buying a new vehicle in two years’ time you will be charged £140 VED.
These new rates only apply to cars registered on or after 1 April 2017 until then the existing system will remain in situ and you will have time to purchase a new vehicle before the changes kick in.
This is taken from our Environmental newsletter for September. Hawksafe clients will find this delivered straight to their inbox. If you would like to find out more about our services and expertise, please do get in touch.