A radical overhaul of car tax rates comes into force on 1 April, and means anyone about to buy a new car – and particularly an expensive low-emissions vehicle – should consider bringing forward their purchase if possible.
The complicated changes to vehicle excise duty, set in motion by former chancellor George Osborne, will have the biggest impact on those buying the smallest/greenest cars or those with a list price of £40,000-plus. Buyers of some more expensive petrol models face a typical £1,200 first-year charge (up from £650), and then a £450-a-year car tax charge for the following five years .
It’s important to note the changes only apply to new cars bought after 1 April. There are no changes to the way cars registered before that date are taxed.
The biggest changes affect buyers of new small cars that emit just over 100g of CO2/km, who will soon pay at least £140 a year to tax their car; previously such cars were free or paid just £20 a year. Someone buying a Peugeot 208 1.2 PureTech after 1 April will pay £420 over the first three years of ownership compared to just £40 if they register on 31 March.
However, the biggest financial impact will be felt by those driving bigger, more expensive cars, with those costing more than £40,000 attracting a new £310 annual surcharge for five years. The move means that owners of the fully electric Tesla models will still pay nothing in the first year of ownership, but will pay £310 for the following five years.
The changes were introduced because the existing road tax regime is costing the government a packet in terms of lost revenue. Carmakers slashed the CO2 emissions of their cars to take advantage of the generous VED tax bands for lower-emission vehicles. It’s reckoned that a quarter of new cars registered don’t pay any road tax at all as they have emissions of less than 100g/km.
Land Rover Discovery SDV6 SE
Six-year VED total at 2015 rate £2,090
Six-year VED total at 2017 rate £3,450
Change +£1,360
Owners will pay £1,200 in the first year and £450 a year for the subsequent years, by virtue of its £41,600 list price.
Tesla Model S
Six-year VED total (2015 rate) £0
Six-year VED total (2017 rate) £1,550
Change +£1,550
This will cost nothing in first-year VED, but thereafter face a £310 annual surcharge as it costs more than £40,000. Bad news for those going for a zero emissions car.
Volvo V60 D6 Twin Engine SE Lux
Six-year VED total (2015 rate) £0
Six-year VED total (2017 rate) £2,260
Change +£2,260
This diesel-electric hybrid offers exceptional economy and a CO2 figure of just 48g/km. But it costs £45,000, meaning buyers after 1 April face a big increase.
Peugeot 208 1.2 PureTech
Six-year VED total (2015 rate) £100
Six-year VED total (2017 rate) £840
Change +£740
This emits just 104g of CO2/km, but buyers will have to pay £140 a year to tax it, and the same in the first year. It was previously free in year one then £20.
Nissan Qashqai 1.6 dCi
Six-year VED total (2015 rate) £150
Six-year VED total (2017 rate) £860
Change +£710
In the first year buyers after 1 April will pay £160 (up from £0) and then £140 a year afterwards – a big increase on the previous £30 a year.
