Major Car Tax Overhaul Begins This Wednesday
Significant changes to car tax regulations are set to impact millions of drivers across the country starting Wednesday, April 1. The government has unveiled new Vehicle Excise Duty bands that will alter the financial landscape for vehicle owners.
New VED Structure for Modern Vehicles
Under current government rules, all petrol, diesel, and electric cars registered on or after April 1, 2017 must pay a standard flat fee. However, vehicles with an original list price exceeding £40,000 (or £50,000 for electric models) face an additional luxury car supplement. This supplementary charge applies for five years, beginning from the vehicle's second year of registration.
When purchasing a new car, owners must pay the first year's tax in advance, with the amount determined by the vehicle's CO2 tailpipe emissions and fuel type. For diesel cars that fail to meet the Real Driving Emissions 2 standard for nitrogen oxide emissions, higher rates apply. Vehicle manufacturers can confirm whether specific models comply with this environmental standard.
Updated VED Rates for Post-2017 Vehicles
The new tax structure for vehicles registered after 2017 includes the following CO2-based bands:
- 0g/km – £10 (unchanged)
- 1-50g/km – £115
- 51-75g/km – £135
- 76-90g/km – £280
- 91-100g/km – £365
- 101-110g/km – £405
- 111-130g/km – £455
- 131-150g/km – £560
- 151-170g/km – £1,410
- 171-190g/km – £2,270
- 191-225g/km – £3,420
- 226-255g/km – £4,850
- 255+g/km – £5,690
Tax Adjustments for Older Vehicles
For cars registered between March 1, 2001 and March 31, 2017, different rate structures apply. Vehicles emitting up to 100g/km continue to pay £20 annually, while those in the 101-110g/km range also maintain this rate. Cars emitting 111-120g/km remain at £35, and 121-130g/km vehicles pay £170.
The complete band structure for these older vehicles includes:
- 131-140g/km – £200
- 141-150g/km – £225
- 151-165g/km – £275
- 166-175g/km – £325
- 176-185g/km – £360
- 186-200g/km – £410
- 201-225g/km – £445
- 226-255g/km – £760
- 255+g/km – £790
Pre-2001 Vehicle Classification
Cars registered before March 1, 2001 fall under the Private/Light Goods vehicle category, which includes private motor cars and goods vehicles with a revenue weight not exceeding 3,500kg. These vehicles are taxed based on engine size rather than emissions, with two main categories: engines not exceeding 1,549cc and those over 1,549cc.
Owners can opt for Direct Debit payment plans, though this method incurs additional costs. For instance, a vehicle with an engine over 1,549cc would pay £393.75 annually through twelve monthly Direct Debit installments, compared to the standard rate of £206.25.
Luxury Vehicle Supplement Details
The expensive car supplement requires vehicles with an original list price above £40,000 (£50,000 for electric cars) to pay an extra £440 annually for five years. This supplementary charge begins in the vehicle's second registration year and applies in addition to standard VED rates.
These comprehensive changes represent a significant shift in vehicle taxation policy, with environmental considerations and vehicle value playing increasingly important roles in determining annual costs for drivers nationwide.
