From 1st April 2017, the biggest changes to Vehicle Excise Duty (commonly known as ‘road tax’) for many years will come into effect.
Instead of VED levies being calculated using a vehicle’s CO2 emissions, a flat-rate system will be imposed from year two onwards whereby almost all new car buyers will have to pay an annual sum of at least £140 – and often considerably more. The cost of ownership during year one is also set to soar, with the VED First Year Rate now as much as £2,000.
This will raise the cost of VED drastically for nearly all models, from city car buyers who would previously be exempt to the owners of executive cars and SUVs, who will often see a three- or fourfold increase in the amount they pay every year.
Fewer exemptions for small cars
As of the 1st April only zero-emissions cars, i.e. cars with all-electric or hydrogen propulsion, will be completely exempt from VED.
Even plug-in hybrids, whose emissions figures are typically assessed as under 50g/km, will be obliged to pay £10 in their first year and £140 thereafter. The numerous owners of superminis with emissions of 99g/km or under will also be obliged to pay £120 in their first year of ownership, before moving to the flat rate of £140 in subsequent years. Most of these cars are currently exempt from VED.
Heavy initial costs for high-end and high-emissions models
The changes will also affect buyers of more expensive cars. From April, all vehicles with a list price of £40,000 will carry an extra ‘Premium’ annual fee of £310 between years 2-6 of ownership – regardless of emissions.
Although the £140 flat rate after the first year of ownership may be similar or even lower than what the drivers of higher-emissions vehicles pay now, the cost of VED has risen substantially for cars producing over 151g/km. New vehicles with a carbon output of over 255g/km will cost their owners £2,000 during the first year of ownership.
How VED changes could affect you...
The vast majority of UK car buyers who purchase a new vehicle after 1st April are therefore set to pay substantially more in VED. For example, after the 1st April 2017, a Ford Fiesta 1.0 Zetec 5-door will cost a buyer an additional £400 over a 3 year period, compared to what it costs at present, with the increase in costs on other models being even more significant.
Drivers who purchase and register new cars before 1st April 2017 will be able to do so under the current VED system – saving themselves hundreds or even thousands of pounds.
Avoid the new rates
At Allen Ford, we’re currently offering a great selection of savings across the Ford range, making it even more cost-effective to buy a new car before the approaching tax increases.