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New vehicle tax rates from 1st April 2017

Tax changes for 2017

The way that vehicles are taxed is changing from 1st April 2017, with a new range of rates payable for different fuel types, engine sizes and carbon dioxide emissions.

The changes will only affect newly registered cars from April onwards, so if a vehicle has already been registered for tax before this date, it will continue under the older system. New and used cars will therefore be taxed in different systems (cars registered between 1st March 2001 and 31st March 2017 will be liable for anywhere between £0 – £505 annual tax, with an additional lump sum payable in the very first year of registration).

Tax discIn the new system, there is still a one-time sum to pay in the very first year of registration. The amount is dependent on how good – or bad – the CO2 emissions from the vehicle are.

With the government keen to encourage buyers to find the more eco-friendly vehicles in the motor trade, there are much lower one-time fees to pay; £0 for CO2 measured at 0g/km, or just £10 if it’s 50g/km or below. There’s a sliding scale with 13 different increments to reflect different emissions brackets, with the very worst gas guzzlers – producing more than 255g/km – owing £2000 for the first year payment.

After the first year, the amount of annual vehicle tax decreases (good news when you’re totting up the cost of fuel, insurance policy and maintenance). If the new car costs below £40,000 then it’s quite a straightforward rate: nothing to pay for electric vehicles, £140 to pay for petrol or diesel vehicles, and £130 to pay for any vehicle run on alternative fuels such as LPG (liquid petroleum gas), bi-ethanol or for hybrids.

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It’s slightly more complicated, though, when the vehicle costs more than £40,000. This applies to the list price, so even if you snag a promotional bargain, or you haggle, or receive a discount for a part-exchange, if the published price meets this threshold then the vehicle will be subject to 5 years of additional rates.

The normal annual rate will still apply (£0 / £130 / £140) but for 5 years there will be an extra amount of £310 due, making the total tax payable £310 (electric), £440 (alternative) or £450 (diesel or petrol) each year. Once the period of 5 years is over, the annual tax reverts to the system based on fuel type.

Domestic or professional, custom plates or trade plates, these are the changes which will take effect from 1st April 2017, so make sure you understand the new system.

Drivers who are unsure about how the changes may affect them can check online using the gov.uk website. Entering the vehicle details online will provide an overview of your tax payments due.


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