New Vehicle Excise Duty (VED) Rules Explained In Detail

Auto Insurance

New Vehicle Excise Duty (VED) Rules Explained In Detail

One of the major developments made by the government and the department of transportation is the imposition of new car tax rules on UK motorists. With effect from 1st April 2017, the rule would be applicable for vehicles bought and registered after this date and drivers need to pay more Vehicle Excise Duty (VED) than they are paying as of 31st March.

Under the new system, depending upon the carbon emission the VED is categorised into 13 bands ranging from A to M. It simply means that if your vehicle is emitting more CO2 then you have to pay higher tax and if it emits CO2 less than 100g/km then no tax would be levied on it.

For the first year, VED would be exempted only for cars that emit 0g CO2/km. This is possible only with electric and hydrogen vehicles so other vehicles need to pay tax that may vary from £10 for cars emitting 1-50g/km CO2 to £2000 for those emitting over 255g/km CO2.

The latest rules ensure that from the second year, the exemption would be there for vehicles that emit 0g CO2/km and all other vehicles have to pay a standard £140 flat rate. The tax would vary as per the cost of the vehicles; cars with a price tag of over £40,000 need to pay an extra £310 annually for five consecutive years.

After the five years, they need to pay according to the standard rates. The rules are extension to the car tax rules declared in 2014 and are made to ensure that Britons choose environment friendly vehicles.

VED tax bands coming to effect from 1April 2017 are:

CO2 emissions (g/km)First year rateStandard rate*
1 – 50£10£140
51 – 75£25£140
76 – 90£100£140
91 – 100£120£140
101 – 110£140£140
111 – 130£160£140
131 – 150£200£140
151 – 170£500£140
171 – 190£800£140
191 – 225£1200£140
226 – 255£1700£140
Over 255£2000£140

 Note: Cars with a purchase cost above £40,000 need to pay extra £310 per year plus the standard rate for a period of five years.

How will the changes affect the buyer?

Well, as the rules are beneficial for people having low emission vehicles, one would see an eventual shift in the buying patterns of Britons. People would choose low CO2 emitting vehicles to save the VED and overall motoring costs.

In simple terms, anyone buying a hybrid car, superminis etc. that emit less CO2 than 100g/km would just pay anything between £10 and £120 in the first year. Moreover, if they have bought the car before 1 April 2017 then they need not pay anything. The tax is free for people who bought the vehicle before the beginning of the second quarter of the year 2017.

Talking about the new scheme, drivers need to pay anything up to £120 in the first year and £140 for each year thereafter. Another remarkable thing under the old scheme was that drivers with car emitting between 101 and 110g/km would not pay anything in the first year but pay a small amount of £20 for each following year.

Contrary to this, now the drivers with vehicles emitting the same amount of CO2 have to pay £140 in the first year and the same from year two as well. This is a huge difference and would take up your annual motoring budget to another level.

In addition, people with vehicles that emit CO2 above 255g/km would pay £2000 as VED designed under the new scheme. This suggests that you would pay more if your vehicle is polluting the environment and lower if it ensures that Britons can breathe fresh air. Moreover, vehicles bought before 1 April are not bound by the new scheme and need to follow the old scheme. So, if you have any plans of buying a vehicle then its best to buy before 1 April 2017.

Having said this, you can also minimise the insurance cost to keep your annual motoring cost under control. For this, you should compare car insurance providers across the UK and select the cheapest deal provider. However, you cannot compromise on the service and so you choose a car insurance provider that is affordable yet an effective service provider.

To find the best motor insurer in the UK, leverage our free car insurance comparison service as we suggest deals with the biggest discounts so that our customers make big savings. To know more about our services, either click or call our friendly team of price comparison experts on 02034757476. Choose our car insurance comparison services and grab a chance to save up to £200.

You may like: Road Tax Rules For 2017 – Why You Should Buy a Car Before the 1st April 2017?

Compare Car Insurance Providers and Save Up to £200

Go Back
Compare Car Insurance Providers and Save Up to £200