Road tax changes in 2017 – what's happening?

The present system for taxing a new vehicle in the UK is about to be changed on the 1 st of April 2017. In the summer of 2016, George Osborne the Chancellor of the Exchequer at the time announced a radical overhaul of the road tax system known as Vehicle Excise Duty or VED, which will make some vehicles a lot more expensive to run.

What are the current vehicle tax rules?

At present, tax is calculated solely by CO2 emissions, and the value of a car is not taken into consideration. Cars that emit up to 100g/km of CO2 pay no tax at all, and cars that emit between 101-120g/km of CO2 pay small amounts of money, it is not until you get to emissions of 121g/km of CO2 that you start to pay a high amount for tax.


What changes are being made to vehicle tax?

The amount you pay will still partly be based on your car’s CO2 emissions. New cars will still be separated into 13 different CO2 emission bands, which will decide how much you pay in the first year of ownership. Only zero emission cars, such as electric vehicles will qualify for the lowest tax band and thus cost £0 to tax.

From the second year onwards, vehicles that have zero CO2 emissions and cost less than £40,000 new remain free of tax, while a flat rate if £140 a year will be payable for all petrol, diesel and hybrid vehicles that are under £40,000. Any cars over the value of £40,000 will incur a premium fee of £310 for years 2 to 5 of ownership, regardless of what the CO2 emissions are. This essentially means that electric cars over £40,000 and would normally qualify for free road tax every year will no longer be the money saving option they presently are in year one. It is worth bearing in mind that it’s the final list price of your car that will determine the £40,000 threshold.

On your right hand side you can find a full table outlining how much you will need to pay in the first year, and in the years thereafter:​

VED car tax rates for cars registered on or after the 1st April 2017.


Should I buy my new car before 1st April 2017?

In short yes, as if you buy your new car before the 1st of April 2017, you will not be affected by the vehicle tax changes because they only apply to cars registered on or after that specific date. Your tax will continue to be calculated using the old tax system meaning in most cases you will be better off and will be saving money. However the amount of money that you save does all depend on the type of new car that you’re buying. The new rules still make it financially rewarding to own a pure electric car such as the Hyundai Ioniq as you will still pay no car tax.


Below you can find examples of how the 2017 vehicle tax changes will affect some of the cars available to buy at SDM:


Hyundai i10 

CO2 emissions: 98g/km

BUY NOW AND SAVE £400 OVER THREE YEARS

Current legislation:

  • ​1st year tax: Free
  • Standard tax rate: £0

Cost over 3 years: £0

New Legislation (1st April 2017):

  • ​1st year tax: £120
  • Standard tax rate: £140

Cost over 3 years: £400

2017 Mazda3

CO2 emissions: 99g/km

BUY NOW AND SAVE £400 OVER THREE YEARS​

Current legislation:

  • ​1st year tax: Free
  • Standard tax rate: £0

Cost over 3 years: £0

New Legislation (1st April 2017):

  • 1st year tax: £120
  • Standard tax rate: £140

Cost over 3 years: £400

Toyota Yaris

CO2 emissions: 92g/km

BUY NOW AND SAVE £400 OVER THREE YEARS

Current legislation:

  • ​1st year tax: Free
  • Standard tax rate: £0

Cost over 3 years: £0

New Legislation (1st April 2017):

  • 1st year tax: £120
  • Standard tax rate: £140

Cost over 3 years: £400


See our new car offers for Hyundai here

See our new car offers for Mazda here

See our new car offers for Toyota here