Changes to vehicle excise duty in 2017 mean motorists who choose to drive gas guzzlers and who currently pay up to £500 per year, will save over £350 per year on the charge, which is commonly referred to as road tax. The most polluting cars will pay £375 less compared to this year’s rates.
In yet another, and arguably retrograde, reform of vehicle excise duty (VED), every car first registered from 1 April 2017 onward, irrespective of the amount of pollution it produces, will pay a flat standard rate.
First year rates will continue to vary according to the carbon dioxide emissions of the vehicle, but a flat standard Rate (SR) of £140 will apply in all subsequent years.
For example, the driver of a one-year-old Land Rover 3.0 SDV6 with CO2 emissions of over 225 g/km will pay only £140 per year – a dramatic reduction of over £350 per year on current rates.
Vehicle excise duty: Cars first registered after 1 April 2017
| CO2 emissions 2017 | First year… | Standard rate… | ||
|---|---|---|---|---|
| 1-50 g/km | £10 | £140 | ||
| 51-75 g/km | £25 | £140 | ||
| 76-90 g/km | £100 | £140 | ||
| 91-100 g/km | £120 | £140 | ||
| 101-110 g/km | £140 | £140 | ||
| 111-130 g/km | £160 | £140 | ||
| 131-150 g/km | £200 | £140 | ||
| 151-170 g/km | £500 | £140 | ||
| 171-190 g/km | £800 | £140 | ||
| 191-225 g/km | £1,200 | £140 | ||
| 226-255 g/km | £1,700 | £140 | ||
| Over 225 g/km | £2,000 | £140 | ||
*cars over £40,000 pay £310 supplement for 5 years
Vehicle Excise Duty – why the change?
The current VED structure based on CO2 bands was introduced in 2001 when the average CO2 emissions for new cars sold in Britain was 178 g/km. The band A threshold of 100 g/km, below which cars paid no VED was introduced in 2003. Since then, to meet EU emissions targets average new car emissions have fallen to 125 g/km. This is set to continue as manufacturers meet further EU targets of 95 g/km set for 2020.
Additionally, the system results in significant unfairness as owners of newer cars pay little or no VED while owners of older cars generally pay higher rates.
The reforms are moving VED to a flat standard rate in a bid to make the tax ‘fairer, simpler and sustainable’.
If anyone is able to explain why it would not be significantly fairer, simpler, more sustainable and cheaper to simply add another tax to petrol and diesel, please leave a comment below.
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Anthony
The common name for VED is “Car tax” or “Vehicle tax”, as per Government websites. Only mis-informed people call it “Road tax”, which it most certainly is not.
Martin Gibson
“If anyone is able to explain why it would not be significantly fairer, simpler, more sustainable and cheaper to simply add another tax to petrol and diesel, please leave a comment below.”
OK, here goes. Mileage related taxes (like petrol) fall disproportionately on those who most need to travel by car – those remote rural areas. Not all rural residents are super-rich 4×4 drivers, but many have little choice over travel mode. Compare that with urban areas with lower typical mileages. Here a small extra cost on fuel is unlikely to change behaviour, and the number of vehicles mean the mileage of the whole population (and hence emissions) will be higher. A fixed annual tax on poor performers is more likely to make people in either area think twice about what they buy. And it’s not just about gas guzzler 4×4 vs. super efficient compact car. It can be a nudge one bracket down. Cumulative effect of that can be a positive one.
Also, think about marketing appeal – “Zero Road Tax” – I’ll have some of that. “Save 0.01p/mile on fuel” – erm, whatever.
Peter Mccullough
Why put extra charge on fuel which will effect everyone,even those who do not own a car. Most products are conveyed by all types of transport which will cost more to move around the country to stores,this extra cost will be passed on to consumers, which is not fair. People on limited or little wages are struggling now. If you can afford to run a car now,enjoy it,remember which petrol was .1.42 a ltr?
Catch a grip.
Iain
So, why is it going back to a flat rate? Back to what it was before March 2000 when there was a flat rate tax.
Surely it would be much better to scrap the VED altogether and shift it onto fuel.
As it is (a flat rate tax) it is a tax on car ownership and not usage.
John Fletcher
Since its introduction, I have argued that the whole CO2 emissions-based VED was doomed to fail – I had a letter in the Daily Telegraph no less! The desperate measures adopted by some manufacturers to deceive both HMRC and consumers regarding their CO2 emissions has proved my point. The CO2 emitted by burning a litre of petrol or diesel (or LPG for that matter) is pretty much fixed by the natural laws of chemistry, so why go for a costly and corrupted exhaust test when the CO2 can be taxed through simple, verifiable fuel sales?
Hardship cases such as farmers can and should be helped to meet the increased costs of additional fuel duty, but most other rural dwellers just like to think they need 4×4 muscle-cars. The reality is that all most of them need is a set of winter tyres; I proved this over many years of rural living – my little i10 got me anywhere I wanted, even through deep snow.
Laurence Aldridge
I may be being dense but does this mean that cars already registered for some years before will not be affected? Or will my car tax goes up next year?
David Futter
The higher the mileage the more beneficial it is to have a more fuel efficient car, so when every rural car is in the (former) zero tax band we know the fuel tax is high enough. Personally I think the fairest form of tax would be a tax per journey, but that would be devilishly difficult to collect so it won’t happen. It would encourage cycling and walking for short trips though!
John Riley
TAX fuel it is the one tax in life you can avoid without having to pay for an accountant. Drive a fuel efficient car or better still Electric. Switch off the engine when parked or lift share then there is the option to cycle or walk.
But let’s face it this government is anti environment just look at the facts.
No tax rises on fuel.
Tax for high CO2 emissions from vehicles reduced.
Fracking and tax help for oil companies.
Reduced FIT for solar.
Tough planning for wind energy and watered down planning for fracking.
Paul Dunbar
The absolute cynic.
Politicians (particularly this latest lot) don’t really give a damn about anything other than their own pockets. Many will own multiple cars and nice ones at that. Which are likely to fall into the higher current VED brackets. By changing the rate paid they will save money.
Look no further than how any change to any system in this country is motivated than how the government’s front bench will profit on a personal basis.
I’m a cyclist and a car user and I work for the NHS. Early this year I managed to afford my first zero VED car.
Thank you for the face kicking Dave, I really appreciate it and will add these bruises to those from the last lot.
Kevin
Wouldn’t it just be easier to pay 60% income tax and scrap all other taxes? After all, people in the U.K. get taxed on vertually every thing they do or buy!
The 60% was a figure plucked out of the air, but seriously, has anyone actually worked out how much they pay out on steath taxes?
The government needs money to run the country, I think we all know that, but why make it so complicated?
Unfortunately I think they are correct in their thinking that most people will not realise how much they pay in stealth taxes!