How Is Car Tax Changing in 2017?

7th February 2017 | ifa_admin

shutterstock_167054273In April 2017, the system for taxing a new car will be changing. The new regulations start on 1st April and actually means that the running of some cars will be a fair bit more expensive.

What Is Actually Happening?

The VED (Vehicle Excise Duty) you pay on your car will still partly be based on the C02 emissions, but while the government have been encouraging us to use hybrid vehicles by making them tax free, the benefits of this option will be greatly reduced after 1st April this year. Only zero emission vehicles such as electric cars can qualify to be tax-free. New cars continue to be divided into 13 C02 bands that determine how much tax is paid in year one. In year two, zero-emission vehicles costing less than 40k stay tax-free, but a rate of £140 per year will be charged for al all other vehicles costing less than 40k. Vehicles over 40k have a premium fee of £310 from years two to five, regardless of emissions. Currently, car tax is calculated purely on C02 emissions and does not account for the value of the vehicle.

Should I wait Until April To Buy A New Vehicle And What About Cars That Are Currently Registered?

Despite these new rules, it is still financially beneficial to own electric cars. Buying vehicles such as BMWi3, Renault, Zoe or Nissan Leaf will still mean you will not be paying car tax. However, premium electric cars such as a Tesla Model S means you will be worse off if you wait. Low-emission cars will be the hardest vehicles hit. If you wait to buy one of these vehicles than you will be paying substantially more in tax over the next few years.

If you purchase a car before 1st April 2017 then you will not be affected by these changes. Your car tax will still be calculated using the current system meaning in most cases you will be better off.

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