Having convinced us all to buy environmentally-friendly cars thus far, the road tax system ie Vehicle Excise Duty (VED) rates, seems to be penalising those of us who choose brand new green cars after 1 April 2017.
That’s because too many of us responded to the financial incentives of old and now HM Government’s road taxation coffers are on the wane.
The good news is, for the majority of us that continue to drive our existing cars, there’s no change to the status quo VED rates. And if you were thinking of trading in a low emissions car against a new registration one, you might decide to reconsider this, after reading on.
The new VED regime is set to boost Government coffers by hitting conscientious ie environmentally-minded motorists hardest. Not those who buy zero emission cars because they are still subject to zero VED but those that drive low emission cars. Let me illustrate this with charts listing the ‘old’ and the ‘new’ VED rates from 1 April 2017 below.
The ‘old’ VED regime
If your car was registered between 1 March 2001 and 31 March 2017, the applicable VED rates are split into car tax bands depending on the carbon dioxide (CO2) emissions of the vehicle. These emissions are measured by how many grams are emitted from the exhaust for every kilometre travelled (g/km).
*VED Band/CO2 emissions/Annual Rate
A Up to 100g/km | £0
B 101-110 g/km | £20
C 111-120 g/km | £30
D 121-130 g/km | £115
E 131-140 g/km | £135
F 141-150 g/km | £150
G 151-165 g/km | £190
H 155-175 g/km | £220
I 176-185 g/km | £240
J 186-200 g/km | £280
K 201-225 g/km | £305
L 226-255 g/km | £520
M Over 255 g/km | £535
The new VED car taxation regime
New VED rates apply to all new cars registered from 1 April 2017 onwards. A CO2 based rate still influences the first year fee – but this time only zero emissions vehicles qualify for zero tax. And whilst it’s certainly simpler to follow, a flat fee of £140 now applies for ALL vehicles not categorised as zero emissions, although alternative fuel vehicles get a slightly cheaper fee at £130.
The good news is that the extra revenue from the new VED scheme is to go towards a new road fund for road repairs and maintenance. This is much needed of course so we’ll be watching how much this yields and where it’s spent, in due course.
Emissions/First Year Rate (then it’s £140 per annum subject to exceptions)
Zero emissions | £0
1-50g/km | £10
51-75g/km | £25
76-90g/km | £100
91-100g/km | £120
101-110g/km | £140
111-130g/km | £160
131-150g/km | £200
151-170g/km | £500
171-190g/km | £800
191-225g/km | £1200
226-255g/km | £1700
<256g/km | £2000
*After the first year, only zero emission vehicles continue to pay zero whereas hybrids, plug-ins, bio-ethanol and LPG fuelled vehicles pay £130 and the rest of us £140 per annum. And whilst some might say that if you can afford to buy a car with an RRP of £40,000 and more, you can probably afford to pay the new VED supplement of £310 (over and above the annual duty) we couldn’t possibly comment here. This supplement is levied during the car’s first five years, reverting to £140/£130 afterwards.
VED Car Taxation Anomalies Arising
The following chart is intended to illustrate VED charges/changes from selected small/low cost to big/expensive cars. Please check your new and old car emissions then apply these to old and new VED charts.
NB: Model emissions may vary/5-dr & petrol engines chosen where applicable/eoe.
Model | Emissions | Old VED £ | New VED £
VW E-Up | zero |zero | zero
Hyundai i10 | 108g/km | £20 | £140 (then Yr 2 =£140)
Toyota Yaris | 119g/km | £30 | £160 (then Yr 2 = £140)
Mini Hatchback | 112g/km | £30 | £160 (then Yr 2 = £140)
Suzuki Vitara | 123g/km | £115 | £160 (then Yr 2 = £140)
Honda Civic | 131g/km | £135 | £200 (then Yr 2 = £140)
Audi A4 | 144g/km | £150 | £200 (then Yr 2 = £140)
Lexus IS | 167g/km | £220 | £500 (then Yr 2 = £140)
BMW X6 | 224g/km | £305 | £1200 (then Yr 2 = £140 plus £310 supplement pa during first five years)
Volvo XC90 | 179g/km | £240 | £800 (then Yr 2 = £140 plus £310 supplement pa during first five years)
Porsche Cayenne | 229g/km | £520 | £1700 (then Yr 2 = £140 plus £310 supplement pa during first five years)
No longer are brand new low emission vehicles cheap to tax. We’ve had our day and now it’s time to pay.
Or dig deep and invest in electric? Might this be the financial incentive for more of us to take zero emission cars more seriously?