Added: 25 January 2017

The new VED Vehicle Tax – what you need to know

In accordance with the overhaul of the UK’s system for taxing cars, Vehicle Excise Duty or VED, is set to change from April 2017.

How will it change?

Vehicles registered on or after 1 April 2017 will be taxed based on their list price and fuel efficiency and although similar to the current system, the benefits of hybrid vehicles which have previously been pushed, will reduce significantly after 1 April.

The First Year Rate of Tax will be determined by the vehicles CO2 emissions only, ranging from £10 to £2000. From the second year onwards, most vehicles will move onto a Standard Flat Rate of £140 per year, for all petrol, diesel and hybrid cars.

How much a vehicle costs will also affect the rate of VED. If the list price is more than £40,000, then it attracts an additional ‘premium’ fee of £310 for five years of ownership, regardless of the emissions.

Under the new regulations, it is cost-efficient to own an electric vehicle, if the vehicle has zero-emissions then it will remain tax-free, however some premium models within this sector which have a list price of more than £40,000 will still be subject to the £310 Premium fee.

What if the car is already registered?

Any vehicle purchased before 1 April won’t be affected by the changes as they only apply to cars registered on or after that date.

VED bands and rates for cars first registered on or after 1 April 2017