Bit of a ‘heads up’ – current road tax on new cars changes from 1st April this year
If you are thinking about buying a new car this year, it’s worth checking out our summary of the changes first. Some of the increases in car tax are substantial. The changes will not affect the AMAP rates used when claiming mileage tax relief under PAYE.
Changes to the Vehicle Excise Duty (a.k.a. car/road tax) were mapped out by Chancellor Osborne two years ago. They were initiated in order to take into account the more environmentally friendly technology contained in many new cars and kick in from April 1st this year. Any vehicles that are registered before then are not subject to the new regulations.
So…what has actually changed?
Exempt – electric and hydrogen fuelled cars
Every other car – £140 flat rate, or more.
Your company car benefit will still show on your P11d in the same way and will still have to be reported on your Self Assessment tax return if you fill one in.
This table details the cars’ CO2 emission rates, their previous Vehicle Excise Duty (VED) and the tax due after the changes come into effect in April.
| New car CO2 emission rate | Current annual VED | New annual VED rate (from 1st April) |
| 99g/km | Free | £120, year 1 £140, from year 2 |
| 131g/km | £130 | £200 |
| 151g/km | £180 | £500 |
| 171g/km | £295 | £800 |
| 191g/km | £490 | £1,200 |
| 225g/km | £1,100 | £2,000 |
That’s more than double, and almost treble, for some of the higher emission vehicles. Although this may even out over time, as this figure then falls each year from year 2.
The most disappointed customers will be those looking at low emission or luxury cars, as these were tax free and are now £310 from year 2. If the car is worth over £40,000, then the tax will be £450 from year 2-6.
Examples of common vehicle models, as reported by Auto Express
| Model | CO2 emissions | Current first year VED | New first year VED | Current 3 year tax rate | New 3 year tax rate |
| Peugeot 208 1.2 PureTech (82) Allure | 104g/km | £0 | £140 | £40 | £420 |
| Ford C-Max 1.5TDCi (120) Zetec | 105g/km | £0 | £140 | £40 | £420 |
| Lexus Hybrid auto Luxury | 103g/km | £0 | £140 | £40 | £420 |
| VW Passat 1.6TDI S | 105g/km | £0 | £140 | £40 | £420 |
| Nissan Qashqai 1.6 dCi (130) N-Connecta | 115g/km | £0 | £160 | £60 | £440 |
| SEAT Alhambra 1.4 TSI (150) | 150g/km | £145 | £200 | £435 | £480 |
| Ford Mondeo 1.5 EcoBoost Titanium | 134g/km | £130 | £200 | £390 | £480 |
| Honda CR-V 2.0 i-VTEC SE 4WD | 173g/km | £300 | £800 | £720 | £1,080 |
Why have the changes been made?
Basically, the chancellery are missing out on increasing amounts of potential Vehicle Excise Duty (VED), as a rising number of cars incorporate the technological advances that decrease emissions of CO2 and put them into the 0% or lower rated car tax band.
- 2001 – average new car emissions = 178g CO2/km
- 2003 – average new car emissions = 173g CO2/km
- 2003 – New ‘Band A’ for cars producing less than 100g CO2/km, no car tax to pay
- Since 2003 – average new car emissions = 125g CO2/km
Working with the EU to better care for our planet’s long term future has seen a big push to reduce overall CO2 emissions. Great news for our environment – not such great news for the government’s revenue from car tax!
Check as soon as you can
As you can see, there is a substantial difference between the increases of the assorted models. So, if you are buying a new car, this is a very important part of your prior calculations. If you can make your purchase before April 1st, or go for nearly-new, then the car will remain under the old tax regulations.
As summarised by the founder of www.carwow.co.uk, James Hind, “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 cars will be cheaper to tax if you buy before April 1st.”
