Beat the Vehicle Excise Duty changes
Some major changes to the way Vehicle Excise Duty (VED) commonly known as road tax works will come into effect from April this year. The government has been concerned for some time that the current VED structure is too lenient and that the proliferation of low emission cars is having an adverse effect on the amount of money raised from VED.
This is because under the current VED rules any cars emitting less than 100g/km CO2 are exempt from the charge. These rules were introduced in 2003 when average emissions were far higher than they are now and many popular car models sold in the UK are currently exempt from VED.
Three new bands of VED will be introduced for brand new cars from 1 April 2017, zero emission, standard and premium. From that date, the zero emission rate will only apply to cars with 0g/km CO2 and that cost less the £40,000. The standard rate which will apply to most new cars will be £140. There are a range of bands for the first year rate.
The premium rate will apply for five years (from the second until the sixth year of registration) and will add an additional £310 per year to the VED bill for cars costing over £40,000. The premium rate of VED will even apply to zero emission cars costing more than £40,000. For example, the electric Tesla car which costs over £40,000 would have a zero VED bill in the first year, followed by five years at £310 per year before reverting back to zero.
It is important to remember that cars registered before 1 April 2017 will remain in the current VED system, which will not change. This gives anyone thinking of buying a new low emission car the opportunity to continue to benefit from the road tax exemption if they buy a new car before the April 2017. As things stand this benefit would continue for the life of the car and could represent a significant saving.