Car Tax Changes April 2017

Changes to Vehicle Excise Duty and what it means

The rate of Vehicle Excise Duty (VED) payable on a new car changed on the 1st April

What does this mean?

For the first year the vehicle is taxed, the cost is dependant on the amount of CO2 the vehicle emits. This figure ranges from £10 to £2,000. Cars which don't emit CO2 are not liable for tax, e.g. electric cars.

CO2 Emissions (g/km) Petrol (TC48) and Diesel (TC49)
* Figures taken from
0 £0
1 – 50 £10
51 – 75 £25
76 – 90 £100
91 – 100 £120
101 – 110 £140
111 – 130 £160
131 – 150 £200
151 – 170 £500
171 – 190 £800
191 – 225 £1,200
226 – 255 £1,700
Over 256 £2,000

For the second to sixth year the vehicle is taxed, the amount payable depends on the car's 'worth when new'. Vehicles valued at less than £40,000 when new are subject to a flat rate of £140 per year. Those valued at more than £40,000, are subject to an additional annual charge of £310, brining the annual car tax bill to £450.

After the sixth year the vehicle is taxed, it is still to be confirmed whether the annual tax figure reverts back to the first year rate, or whether a completely new figure is introduced.

Ultimately, the change in legislation means cars with less than 100g/km emissions, which were previously exempt from tax will now cost new car buyers hundreds of pounds, over the years of ownership.

In addition, owners of vehicles with a 'worth when new' of over £40,000, could pay up to £4,250 over the course of a 6 year ownership.

So how does this affect me?

As the new tax rules came into effect on April 1st, buyers are now liable for the first year payment, plus the flat rate annual fee of £140 thereafter (which applies from the second to sixth year of tax). If the car was worth more than £40,000 when new, your annual fee will increase to £450.

The average UK car falls into the emissions category of between 111-130g/km CO2: in which means a payment of £160 in the first year and a flat rate of £140 year there after, as long as the car was worth less than £40,000 when new.

If you would like to work out the cost of a cars tax all you need is the amount of CO2 emissions (g/km) for that vehicle. This gives you the first year tax charge. Thereafter the 'worth when new' flat rates will apply.

So what can you do?

If you decide to purchase a brand new car you should consider the following:

  1. Make sure you factor the new tax expense into the purchase of your new car, especially if the car is worth over £40,000.
  2. If you want to avoid the charges altogether you could consider buying a zero emission car, such as an electric only or hydrogen model: as long as it comes in under £40,000, you will enjoy complete exemption from all these new taxes.