How The New VED Will Affect You

We’re now well into 2017, which means the new rules for Vehicle Excise Duty (VED) or Road Tax will come into effect very shortly. This will involve big changes to the current system, including a switch up to new Road Tax bands which will affect anyone whose new car is not registered by April 1^st.

Currently tax is determined solely by CO2 emissions, with the value of the car not taken into account. However this will all change come April 1^st with the list price of the car now an important factor.

So the question on the minds for many of those considering a new car is this, is it better to wait until April 1^st or is it more cost - effective to change before the new regulations come into play? The answer to this depends entirely on the vehicle you plan to buy, but also the CO2 level and the list price.

The amount of VED you pay will still be based partly on your cars CO2 emissions. However, while the government has been promoting the use of hybrid cars by making many of them free from tax, the benefit of actually choosing one will be greatly reduced after 1^st April. Although they are a great option for a greener environment, will this be enough to entice individuals into purchasing one?

Similar to the current regulations, new cars will be divided into 13 different CO2 brackets to determine how much you will pay in the first year of ownership, but only zero emission vehicles will qualify and therefore be tax free.

From the second year onwards, zero emission vehicles costing less than £40,000 remain tax free; petrol, diesel and hybrid cars that cost less than £40,000 are charged at a flat rate of £140 a year and cars that cost over £40,000 a year attract an additional premium fee of £310 for years 2 – 5 of ownership, regardless of their emissions.

VED bands and rates for cars registered on or after 1^st April 2017

*Cars with a list price of over £40,000 will attract a 310 per year surcharge on top of the standard rate for the first 5 years.

So what does all this mean for those considering a new car this year?  As with most things it all depends on your personal circumstances and what car you have your eye on. In some cases it may be good idea, other car choices may warrant waiting until after April 1^st.