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Mr Fro
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New car tax rules in April 2017: what's changing and what it costs. Share


There is a major change to the rules surrounding Vehicle Excise Duty, also referred to as car tax or road tax, coming in April 2017.


Some drivers could end up paying out hundreds, or even thousands, of pounds more.


Conversely, others could end up saving a packet by choosing the right time to purchase their next car.


What’s going on? We explain all.


The background

In 2015, when George Osborne announced changes to Vehicle Excise Duty to reflect progress in emissions technology, it passed most people by.


Nothing would happen until April 1 2017 – which was too far in in the future to worry about.


Now, suddenly, it is almost upon us, so it’s essential we get to grips with what it means for us, and whether there’s anything we can do to cut the cost.


What’s changing?

The changes reflect the fact that car companies have made major breakthroughs in cutting vehicle CO2 emissions.


Under the existing rules, cars that emit less than 100g/km don’t attract any tax: which applies to around 75% of all new cars.


To keep money rolling in from this tax, under the new system, producing low emissions won’t be enough to free drivers up from the tax: cars will have to produce no emissions at all.


It means that only electric cars and those powered by hydrogen will be exempt.


All other cars will be taxed at a flat rate of £140.


Who will be affected?

This will be a major blow for those driving low emissions cars (under 100g/km).


A car emitting 99g/km bought before April 1 will be free of road tax for life.


Those bought after the date will cost £120 in the first year, and £140 a year thereafter.


There will be a still be a one-off charge in the first year that a car is on the road too. This will continue to depend on the emissions the car produces, and to determine this charge, cars are split into 13 bands, from zero emissions to over 255g/km.


However, the charges themselves will be much higher, and there will be an additional cost in years 2-6 for cars worth over £40,000.


There will still be no charge in the first year for cars with zero emissions, but the tax will kick in at 1g/km (it starts at 131g/km at the moment).


It will also rise further and faster than before, so that cars emitting 131g/km will be taxed £200 instead of £130, those emitting 151g/km will be charged £500 instead of £180, those emitting 171g/km will be charged £800 instead of £295, and those emitting 191g/km will be charged £1,200 instead of £490.


The highest possible charge will continue to apply to those emitting over 255g/km, but that will rise from £1,100 to £2,000.


There’s also a five-year £310 supplement for any cars costing over £40,000, which kicks in from year two - and lasts until year six of the car’s life.


The supplement also applies to zero-emissions cars.


They will pay nothing in the first year, but £310 a year from years 2-6 (compared to cars worth over £40,000 that produce emissions, which will have to pay £450 a year in years 2-6).


This will be a nasty surprise for those buying luxury low- or zero-emissions cars, which are currently tax-free.


Buyers cannot even negotiate a discount to bring the car under the £40,000 threshold because it will still be taxed on the list price.


They need to beware of optional extras too, because the list price you pay tax on will include all these extras. In some cases, spending a few hundred pounds on extras could end up costing you hundreds more in tax.


Better off

There are some owners who will be better off – eventually. Those driving more polluting cars will pay a much higher tax in the first year, but much lower tax in subsequent years – so eventually they will break even.


A car emitting over 255g/km, for example costs £1,100 in the first year, and £505 a year thereafter.


Under the new system it costs £2,000 in the first year, and £140 thereafter. It will therefore take three and a half years before the new system becomes more cost-effective.


If this high emissions car cost over £40,000, however, it would take just shy of eight years before they were better off under the new system, because the £310 a year surcharge for years 2-6 would set them back so far.


A car emitting 186g/km, meanwhile, would cost £800 in the first year - as opposed to the current charge of £490.


However, thereafter it costs £140 a year instead of £265.


It means drivers will be better off under the new system after just shy of four years.


What can you do?

The change will affect anyone buying a new car from April this year.


All cars registered before then will come under the current system for life.


Therefore, if you are in the market for a new car, it makes sense to do the calculations, and work out whether you would be better off bringing the purchase forward to before April 1 so you can benefit from the current system, or wait until April, and take advantage of the new one


If you are planning to by a low emissions car, or an expensive vehicle, it may make sense to bring the purchase forward, because in most cases the current tax system will work out more cost-effective.


James Hind, founder of the car buying platform http://www.carwow.co.uk, says: “Some models will cost significantly more to tax each year, so there are long-term savings to be had by buying before the new system kicks in.


Hybrid cars and small petrol-powered city cars will be cheaper to tax if you buy before April 1.”


If you cannot buy your low-emissions car before April, then when you eventually do buy, it’s worth considering a nearly-new car, which will continue to be taxed under the old system.


Hind says he expects there to be reasonable interest in nearly new cars of this kind after the system changes.


Resale value

If you prioritise having a brand new car over the tax regime, it’s worth bearing in mind that not only will you pay more tax, but it could hurt the resale value of the car when you come to sell it on.


Second-hand car buyers will be aware that a car that’s just a few months newer, and taxed under the new system, will cost them £140 a year more to run for life.


This is bound to have a knock-on effect on the price they are willing to pay.


Conversely, if you are planning to buy a car with higher emissions, it may be worth waiting for the new car tax regime, especially if you plan to own the car for a while, because you will pay less over the life of the car.


Hind says: "Some models will be cheaper afterwards – notably anything that costs just under £40,000 while emitting lots of CO2."


If you are buying a year or more down the track, it may also make sense to consider a car that’s more than a year old, but taxed under the new system.


For all cars under £40,000 with emissions over 141g/km, the annual charge will be lower under the new system, so once someone else has paid the first year’s higher charge, you could save money immediately by buying a car that’s taxed under the new system.


Of course, once we have gone beyond April, anyone wanting to own a brand-new car will have no choice buy the pay tax under the new system.


The only silver lining is that when Osborne announced the change, he also said that, from 2020, any money raised by car tax would be ploughed straight into a road repair fund – and not swiped by the Treasury for general spending.


This will be the first time since the 1930s that a car tax will actually pay for the roads.


So while you may end up paying more in tax, there’s a good chance you will end up paying less to have your car fixed as a result of driving on the UK’s poorly maintained roads.

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The new rules do not apply to motorcycles and will only apply to newly registered vehicles. It will not be applied to vehicles already on the current system.

doesnt stop them increasing the cost for older cars, or recategorising older cars into higher cost bands like they did last time.

One of my cars is tax band L, it costs me 500 per year. i fully expect that to increase soon. I see that as an investment in a hotter climate 8-)

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... I see that as an investment in a hotter climate 8-)

:-D


I've decided my next car is going to be a classic. The VED is free and the rolling 40 year cut off will bring more stuff in to it.


I'm distinctly uncomfortable with the money I've lost on my car over the last few years. For the same amount as the depreciation, I could have bought a very nice Rolls Royce, run it about and probably made a few quid when I sold it.

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... I see that as an investment in a hotter climate 8-)

:-D


I've decided my next car is going to be a classic. The VED is free and the rolling 40 year cut off will bring more stuff in to it.


I'm distinctly uncomfortable with the money I've lost on my car over the last few years. For the same amount as the depreciation, I could have bought a very nice Rolls Royce, run it about and probably made a few quid when I sold it.

cars are a massive waste of money. Bikes hold their value much better.

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Also sounds like they are going to be targeting diesels with all these changes that they are talking about!


Looks like a petrol for my next car then! especially if I have to start paying VED!

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Too true - I got a bit carried away with the "Ooh, shiny new car!" think. :roll:


I genuinely wish I'd kept my shitty old diesel Volvo Estate. At least I could fit things in it and it cost £0 in services for the few years I had it.

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Also sounds like they are going to be targeting diesels with all these changes that they are talking about!


Looks like a petrol for my next car then! especially if I have to start paying VED!

they encouraged people to get diesels, as soon as the majority of UK cars were diesel, they've made sure the fuel tax was higher and now they are going to penalise people for having a diesel buy messing with the VED.

waiting for retro-fit electric motors to become a reality ...

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Too true - I got a bit carried away with the "Ooh, shiny new car!" think. :roll:


I genuinely wish I'd kept my shitty old diesel Volvo Estate. At least I could fit things in it and it cost £0 in services for the few years I had it.

I remember when a biker would never own up to owning a Volvo.


...and when all of this were fields.


...and when we could leave our front doors unlocked. Eeee, it was a better time. We looked after our own. The Krays may have been badduns, but they were OUR badduns and they loved their Mum. Gawd bless 'em.

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actually with the new new rules its time to buy a huge monster gas guzzler... VED will be the same price for all petrol engines regardless of size or emissions, so as long as the car costs less than £40k new, the tax will only be £140 per year (after first year)

So, lets all rush out and buy V8 5L petrol mustangs!

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Also sounds like they are going to be targeting diesels with all these changes that they are talking about!


Looks like a petrol for my next car then! especially if I have to start paying VED!

they encouraged people to get diesels, as soon as the majority of UK cars were diesel, they've made sure the fuel tax was higher and now they are going to penalise people for having a diesel buy messing with the VED.

waiting for retro-fit electric motors to become a reality ...

 

I don't think it will come to that, I reckon we're only a couple of years away from retrofitting adblue and dpfs on older diesels though, is not have a great problem with adblue, dpfs are a recipe for disaster though.

I passionately hate my car at the moment anyway, it's just cost me £2.5k for a recon gearbox!.

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Might have been on here before but I just saw the brilliant new VED rules.


Just seems like yet another way to tax the nob of people who work hard and want decent things. Grumble grumble.

 

Unfair tax in my opinion. Most light weight motorcycles are taxed around £80, whereas a 3 ton Audi 4WD that is very heavy and causes oodles more damage to the road surface pays NO tax. Emissions are used as an excuse for a 'green' tax (like the green airport tax what we have to pay. Irrespective of how many are on the plane, the plane flies anyway) just to take money off us.

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I'm not actually too bothered about the new rules. The current system is what put me off buying something like an RX8 (about £450/year) and the new flat rate is only just a tad higher than what I pay for my current car. I'm unlikely to buy a new high value car and so it means if I want a gas guzzler like a V8 Mustang a few years down the line then it'll be cheaper for me in terms of VED. I wonder how it will affect the value of second hand machines though. I'd actually be happier if they applied it to older vehicles because my costs won't go up and I could go and buy an RX8 as a second car.

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They won't force cars to retro fit a DPF it would be far too expensive and too hard to police


They will just introduce huge VED on them in the future

 

Hopefully Euro 6 diesels will be ok, I'd actually consider a petrol car next time but I need a 4x4 and after my current experience with Land Rover preferably one that won't break, unfortunately Toyota only offer the Land Cruiser in diesel format :(.


The only way to Police adblue/dpf retrofitting would be to make it part of the MOT.

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They won't force cars to retro fit a DPF it would be far too expensive and too hard to police


They will just introduce huge VED on them in the future

 

Hopefully Euro 6 diesels will be ok, I'd actually consider a petrol car next time but I need a 4x4 and after my current experience with Land Rover preferably one that won't break, unfortunately Toyota only offer the Land Cruiser in diesel format :(.


The only way to Police adblue/dpf retrofitting would be to make it part of the MOT.

I was considering the Hyundai Santa Fe. 4x4 with Lots of equipment as standard and some good discounts off new cars at the moment. Compared to the German makes you get way more for your money.

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They won't force cars to retro fit a DPF it would be far too expensive and too hard to police


They will just introduce huge VED on them in the future

 

Hopefully Euro 6 diesels will be ok, I'd actually consider a petrol car next time but I need a 4x4 and after my current experience with Land Rover preferably one that won't break, unfortunately Toyota only offer the Land Cruiser in diesel format :(.


The only way to Police adblue/dpf retrofitting would be to make it part of the MOT.

I was considering the Hyundai Santa Fe. 4x4 with Lots of equipment as standard and some good discounts off new cars at the moment. Compared to the German makes you get way more for your money.

 

Yeah I'd not rule something like that out, the trouble is I do need one with fairly decent off road ability, which makes my options somewhat limited as I don't particularly want a compromised road car, so that and reliability Toyota looks like the best option.

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