Car tax changes explained

As of the 1st of April, the way vehicle car tax is calculated was changed for cars and some motor homes that are registered with the DVLA. So here at Vasstech we decided to give you some information on the changes!

Will my current car be affected?

The car you already own will continue to be charged in accordance with the current tax, but the changes could have an affect on purchases made after the 1st April 2017.

The rates

Vehicle tax for the first year is based on CO2 emissions. After the first year, the amount of tax that needs to be paid depends on the type of vehicle. For example:

Cars emitting 131g/km will be taxed £200 instead of £130, those emitting 151g/km will be charged £500 instead of £180, those emitting 171g/km will be charged £800 instead of £295, and those emitting 191g/km will be charged £1,200 instead of £490.

The highest possible charge will continue to apply to those emitting over 255g/km, but that will rise from £1,100 to £2,000.

Why is the change being made?

The current structure based on CO2 bands was introduced in 2001 when average UK new car emissions were 178 g/km. The Band A threshold of 100 g/km below which cars pay no VED was introduced in 2003 when average new car emissions were 173 g/km.

Since then, to meet EU emissions targets average new car emissions have fallen to 125 g/km. This means that an increasingly large number of ordinary cars now fall into the zero or lower-rated VED bands, meaning they pay no tax at all.

Luxury car

If a vehicle has a list price of more than £40,000, the rate of tax is based on CO2 for the first year. Additionally, cars worth more than £40,000 that produce higher emissions will have to pay £450 a year in years 2-6.

Sports cars and SUVs that cost less than £40k, and have emissions of 226g/km and above, will actually work out cheaper under the new regime. Buyers could save £600 over the first five years and a huge £2,500 over ten years under the flat-rate system.

So if you were registered before the 31st March then don’t worry! If not we hope this blog helps with any questions you may have, and you can always contact us for more information.