Motorists in the UK are facing a significant update to the vehicle tax system, with the introduction of 13 new tax bands specifically targeting petrol and diesel cars registered on or after 1 April 2017. This overhaul means that owners of these vehicles must navigate a more complex structure based on environmental factors and vehicle value.
Understanding the New Tax Structure
For cars first registered from April 2017 onwards, vehicle excise duty (VED) is payable upon initial registration, covering the first 12 months of use. Following this initial period, tax must be paid every 6 or 12 months at varying rates. The core of this new system hinges on a vehicle's CO2 emissions at the time of first registration, which also extends to certain motorhomes.
Diesel Surcharges and Luxury Fees
A critical aspect of the updated regulations is the imposition of higher rates for diesel cars that fail to meet the Real Driving Emissions 2 (RDE2) standard for nitrogen oxide emissions. Vehicle owners are advised to consult their car's manufacturer to confirm compliance with this standard.
Additionally, a 'luxury car tax' applies to vehicles with an original list price exceeding £40,000 for conventional fuels or £50,000 for electric models. This adds an annual fee of £425 to the standard VED, potentially increasing the total to £620 per year.
Projected Costs and Industry Insights
According to the RAC, while official rates for April 2026 onwards are pending, expectations point to a rise in VED costs. For most newer car drivers, the annual fee is anticipated to increase from £195 to £200, adjusted in line with the Retail Price Index (RPI).
It is important to note that electric vehicles will no longer benefit from free road tax. Starting in April 2026, EV drivers will begin paying a flat rate of £200 annually, aligning them more closely with traditional fuel vehicles.
First-Year Tax Bands Based on CO2 Emissions
The tax bands are meticulously categorised by CO2 emissions in grams per kilometre (g/km), with rates escalating significantly for higher emissions. Below is the full list of the 13 new bands:
- 0 g/km: £10
- 1 to 50 g/km: £115
- 51 to 75 g/km: £135
- 76 to 90 g/km: £280
- 91 to 100 g/km: £365
- 101 to 110 g/km: £405
- 111 to 130 g/km: £455
- 131 to 150 g/km: £560
- 151 to 170 g/km: £1,410
- 171 to 190 g/km: £2,270
- 191 to 225 g/km: £3,420
- 226 to 255 g/km: £4,850
- Over 255 g/km: £5,690
Factors Influencing Your Tax Bill
The exact amount of annual road tax payable depends on several key factors. These include the year the car was first registered, the type of fuel it uses, and its tailpipe emissions. Owners of vehicles registered before 2017 may find themselves paying different rates, as the new bands apply exclusively to post-2017 models.
This revised tax system underscores a broader shift towards environmental accountability in motoring, incentivising lower emissions and penalising higher-polluting vehicles. Drivers are encouraged to stay informed about these changes to manage their vehicle-related expenses effectively.
