Changes to the Vehicle Tax

By Lewis on 20th April 2017 - View Comments

What You Need To Know About Changes To Vehicle Tax This April – by Justin Fox

If you’ve just passed your driving test, are looking to drive, or are thinking of purchasing a new car from this coming April onwards, you need to be aware of the latest amendments to Vehicle Excise Duty (VED) set forth by the DVLA. Having been set for implementation since 2015, this new method of calculating the tax seems complex, but in reality is actually fairly simple to understand.
In practice, the amount you will have to pay depends what category your vehicle falls under, in terms of pollutant emissions. Aside from zero-carbon emitters such as electric and hydrogen cars, all other vehicles will have to pay £140 a year as a base rate. For those that cost more than £40,000 though regardless of emissions, a new fee will apply of £310 every year for five years. After these 5 years are up, the £310 is removed and the tax rate will return to £140.

However if these £40,000 plus vehicles do not give off any emissions, they will be free of the £140 constant tax.
For the majority of road users though, our rate of Excise Duty will be set via a series of ‘CO2 bands’, with the amount of tax owed dependent on the level of emissions. Similar to the methods applied to trucks and lorries, though, the more you pollute the more you will pay. For example a vehicle emitting 111-130g/km of carbon dioxide will have to pay £160, and a vehicle within the 131-150g/km bracket will have to pay £200 a year-on top of the ever-present £140 mentioned earlier. At maximum, the heaviest polluters which are anything above 255g/km will incur a massive £2000 fee initially, but only as part of the additional rate for the first five years.

The new system also takes into consideration the fact that over the years, the price of various makes and models of vehicles will fluctuate. Therefore the value of your vehicle will be taken from the level it was when it was purchased, so you can’t look to take advantage of the system by making a purchase when the cost comes down!

Vehicles also purchased going forward from the end of March will also be divided into one of four categories. These are entitled ‘M, M1, M1SP and M1G’. Category M is your standard 4 wheeled vehicle designed for people transport, M1 is for larger vehicles but with no more than 8 seats, M1SP refers to special purpose vehicles such as ambulances and caravans, and M1G is the category for off-road vehicles like tractors. Regardless of category however, the new charges will still apply.
But why the need for such changes to the law? One common theory is that under the current system, more and more vehicles were being produced that came in below the lowest rate of tax due to technological advancements, which meant that the Government was losing out on a sizable amount of revenue. Others seem to think that the decision was motivated by a concern for the environment, to encourage the purchase of vehicles that are comparably less harmful to our quality of air. There’s been the long-standing issue of fuel efficiency in regards to HGV’S in particular, so perhaps this is a move aimed at making the operators of commercial vehicles think twice before investing in such major sources of carbon pollutant gases. The Government has long been keen for commercial fleet owners to take more of an interest in reducing their carbon footprint, so by incentivising the purchase of electric vehicles for both commercial companies and individuals, perhaps all will be persuaded to make the transition.

So if you’re itching to get out on the road, bear in mind the secondary costs that accompany acquiring your vehicle. Whilst they may be pricy due to the relatively new technology used to power them, electric vehicles appear to be the way to go as politicians seemingly appear to be pricing petrol users off the road, albeit over time. Make sure to research how long you could be paying off your car, and check out what other resources exist that can help save you money.


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