The way Vehicle Excise Duty (VED) is calculated is changing for some vehicles registered from 1 April 2017. All vehicles registered before this date will not be affected.
The changes, announced by the Chancellor in the 2015 budget, set out that from 1st April 2017, the first vehicle licence will be calculated on the vehicle’s CO2 emissions.
The majority of vehicles will then move to a standard rate of £140 annually from the second licence.
Cars with zero emissions will not pay the standard rate of vehicle tax. However, if a car’s list price is over £40,000 at first registration, the customer will pay the additional rate for five years after the end of the first licence.
Pre-April 2017 car tax rates explained
Current car tax rates
|Car tax band||CO2 emissions||First year rate||Annual rate after first year|
|A||Up to 100 g/km||£0||£0|
|M||Over 255 g/km||£1,120||£515|
Car tax rates from April 2017
Car tax rates explained
|CO2 emissions||First year rate||Standard rate|
|Over 255 g/km||£2,000||£140|
Would you be better or worse off under the new system?
(All models listed below are under £40,000)
after one year
after five years
after ten years