Everything You Need to Know About the 2017 Road Tax Changes

Vehicle Excise Duty (VED) is changing in 2017, with an expected 70 percent of drivers having to pay more.

Under the current system, the treasury was losing millions. Why? It’s because manufacturers have come a long way, producing lots of cars with less than 100g/km of CO₂ emissions which have been free from annual road tax. Even cars with up to 120g/km of CO₂ currently pay nothing in the first year and then up to £30 in the second year onwards. At the moment, drivers pay the first year based on the car’s CO₂ emissions which changes in the second year, again based on the car’s eco-friendliness. For cars with up to 165g/km of CO₂ emissions, the second year rate is either the same or more than the first year rate. Cars with over 165g/km of CO₂ emissions have lower tax rates in the second year.

This is all changing on the 1^st April, 2017 however, thanks to the former Chancellor of the Exchequer, George Osborne, as part of the government’s mission to reap the money currently being lost. New cars registered after that date will be subjected to the reformed levy.

Under the new system, drivers will pay the first year rate of VED based on the car’s CO₂ emissions. Different bands determine how much drivers pay, and only cars with zero CO₂ emissions will be exempt from annual road tax. In general, most cars will cost more to tax in the first year under the new bands. For example, cars with 131-140g/km CO₂ figures used to cost £130 to tax in the first year, and from the 1^st April, 2017, they will cost £200.

The most significant change is the second year rate which is a flat-rate fee of £140 for every car. Only those with no CO₂ emissions such as electric, some hybrid and hydrogen models will be exempt. Your car dealership will be able to advise you on the cars that are free from VED. On top of this flat rate, cars that cost more than £40,000 will have an additional £310 to pay annually. This includes cars that have been reduced to less than £40,000 but were originally listed at that price, and those that cost less than £40,000 but the added extras take it over the price.

The way tax is transferred between current and new drivers is also changing. The new owner will have to re-tax the car when they buy it and the previous owner will receive a refund. If sellers don’t inform the DVLA of the changing hands, they will still be liable for any speeding and parking fines.

Only brand new cars registered after the 1^st April, 2017 will be affected. We’re experiencing more people interested in new cars and we’re expecting a rush ahead of the changes to escape having to pay more. If you would like to buy a car under the current road tax system, you’ll have to buy it and register it quickly, so begin searching now to find great deals.

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