In April 2017 there will be some big changes to the car tax rules and everyone is worried that they are going to have to pay hundreds of pounds more than they do now. But have you managed to get your head round the rules yet?
The new rules for VED (Vehicle Excise Duty) or road tax are coming into force soon and some of the articles that have been published in the media are as clear as mud, leading many to worry that they are going to have to pay hundreds of pounds more for VED.
Biggest changes to road taxing
There is no denying these changes are the biggest changes that have ever been made to the system and include a switch in the tax bands to make it even more confusing.
The new road tax rules will impact those who are looking to buy a new car from April 2017.
Some people are asking the question should they wait until April 1st to get a new car or is it more cost effective to get a new car before the price hike comes into force. We’d say it depends entirely on the car you plan to buy and it’s CO2 emissions.
Why is car tax increasing?
George Osbourne introduced the changes after he noted they the levels of CO2 emissions in the UK as falling, and everyone bought into the idea of buying a car with cheaper tax. So in his wisdom decided it would be a great idea to charge people more to tax their cars.
Under the current VED scheme which ends in March 2017 just about everyone with a brand new car is paying little or no road tax which Osbourne noted was costing the government millions. So he decided he would introduce a new tax hike that would see drivers pay higher tax prices on all new cars within the first five years. Setting a flat rate of £140.00 for most cars.
Reducing the amount of cars that are tax exempt.
The current system ensures low-emission petrol and diesel cars are exempt from Tax. Under the new system, only cars with no tailpipe emissions such as electric and hydrogen cars will be tax emept.
To make things a little more confusing if your car costs more than £40,000 you will have to pay a five-year supplement of £310.
However, buyers of more small economical cars will face the biggest hike in tax which on average will cost nine times more than what the current system costs.
Those with higher polluting cars will pay more than the smaller economical cars under the new system, however, they won’t pay as much as the smaller cars in many cases.
Will my tax be increasing for my current car?
Only if you have bought your car after April 2017 you will be subjected to the new Tax band.
So it could be worthwhile buying a new car locked in at the cheaper tax band of £20 VED before the law changes as from the 1stAprilpril the same car would cost you £140 VED
If you already own your car your tax prices will not be impacted.
VED Band from April 2017
|VED car tax bands for cars first registered from 2017 onwards|
|Emissions (g/km of CO2)||First year rate||Standard rate|
|Cars above £40,000 pay £310 annual supplement for five years|
Current Pre(April 2017) VED Tax Bands
|VED Band||CO2 Emissions||Annual rate||First year rate|
|A||Up to 100 g/km||£0||£0|
|M||Over 255 g/km||£515||£1,120|
Are you sure my road tax won’t increase if my car is already registered?
Yes that is right the current road tax bands won’t change for cars that are already registered. Current VED bands will stay in place meaning that you will continue to pay the same VED bands.
So now you can stop worrying that your car tax will increase from £20 a year to £140.
We’d highly recomend if you are looking to change your car and want your car to be in the lower tax band to make sure you buy your new car before April 2017.