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  • Buying a new car? New tax rates from 1 April 2017
  • 23 January 2017
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    Buying a new car? New tax rates from 1 April 2017

    NEW VEHICLES REGISTERED PRIOR TO 1ST APRIL WILL BE EXEMPT FROM THE NEW VEHICLE TAX RATES The vehicle tax reform announced by the Chancellor in the 2015 budget, identified that from 1st April 2017, the first vehicle will be calculated on the vehicles CO2 emissions.

NEW VEHICLES REGISTERED PRIOR TO 1ST APRIL WILL BE EXEMPT FROM THE NEW VEHICLE TAX RATES

The vehicle tax reform announced by the Chancellor in the 2015 budget, identified that from 1st April 2017, the first vehicle will be calculated on the vehicles CO2 emissions. 

The majority of vehicles will then move to a standard rate of £140 annually from the second licence. Cars with zero emissions will not pay the standard rate of vehicle tax. However, if a car's list price is over £40,000 at first registration, the customer will pay the additional rate for five years after the end of the first licence.

How it works:

  • Tax rates for vehicles registered before 1st April 2017 will not be affected by this change. 
  • Only M1, M1SP and M1G type approved vehicles are impacted by these changes. 
  • All vehicles with zero emissions will be exempt from the standard rate of vehicle tax. All other vehicles will pay a standard rate of £140 a year. 
  • An additional rate will be added to the vehicle tax for all new vehicles with a list price of over £40,000. This additional rate of £310  will be payable each year for 5 years from the end of the first vehicle licence. After the 5 year period the standard rate will apply. 
  • Zero emission vehicles will have a standard rate of £0 but if the list price is over £40,000 they will pay the additional rate of £310 a year for 5 years. 
  • Multi stage build M1SP and M1G vehicles without a CO2 emissions figure shown as part of the final type approval will continue to be taxed as PLG. 

What this will mean for you:

  • The rate will based on the CO2 emissions and the list price of the vehicle (inclusive of options). The majority of vehicles will see an increase in VED. 
  • The list price of vehicles subject to the scheme must be provided when the vehicle is first registered. Therefore cost options can increase the list price of the vehicle to over £40,000 and increase the Standard (2nd year) VED rate from £140 to £450 for 5 years. 
  • This list price will be provided by the manufacturer or dealer/retailer and reflect the vehicle list price on the day before it is first registered and taxed. 
  • For new M1, M1SP and M1G improved/Kit built vehicles, the list price or notional price is provided by the person/importer registering the vehicle. 
  • If the vehicle list price was over £40,000 at first registration, the customer will pay £450 a year, after the first vehicle licence. This is made up of the £140 standard rate and £310 additional rate. After five years the vehicle tax will revert to the standard rate of £140 per year.
  • Vehicles with a list price exceeding £40,000 with zero emissions (including electirc) will pay the additional rate of £310 a year for a 5 year period, after the first licence. After the 5 year period these vehicles will pay zero vehicle tax.
Tax rate changes
CO2 emissions (g/km)First year rateStandard rate*
0 £0 £0
1-50  £10 £140 
51-75  £25 £140 
76-90  £100 £140
91-100 £120 £140 
101-110 £140 £140 
111-130 £160  £140 
131-150  £200 £140 
151-170  £500 £140 
171-190  £800  £140 
191-225 £1200 £140 
226-255 £1700 £140
Over 225 £2000  £140 

*Cars with a list price of over £40,000 will pay an additional rate of £310 per year on top of the standard rate, for five years.

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