VED Tax Rules from April 1st 2017

When the tax rules of DVLA for new cars will be fully implemented from April, motorists could possibly be paying hundreds of pounds more each year.

Two years ago, George Osborne, a former chancellor, first publicised the car tax rules and stated that alterations in newer car emissions technology are reflected in the new rules.

In this proposal, several models of cars will significantly cost more to tax every year.

The only cars that will be exempted are hydrogen and electric cars.

Let's find out the reason for this change and how it affects you plus what you can do now to save money.

What is the cause of this change?

The structure currently in use was based on CO2 bands and was initiated in 2001 when 178 gCO2/km was the average emissions of new cars in the UK.
In 2003, the 100 gCO2/km Band A threshold, below which cars don’t pay any VED was set up, at that time 173 gCO2/km was the average emissions from new cars.

Ever since, to meet the emissions targets of the EU, the average emissions of new cars have dropped to 125 gCO2/km.

The implication is that more and more ordinary cars now belong to the lower- or zero-rated VED bands, which simply means they don’t pay any tax at all.

How does this affect you?

Only electric and hydrogen cars will not be affected under the new rules and every single car will be charged a flat fee of £140.
A car with 99g/km emissions will be exempted from paying road tax forever provided that car is purchased before April 1st.

However, purchased brand new after this date and it will be taxed £120 in the first year, and then the standard rate of £140 each year subsequently.

Car Tax Rate Explained

Emissions (g/CO2/km)

First-year rate

Standard rate





































over 255



*Call DVLA Contact Number 0844 241 5511 for more info

For the first year, cars with 131g/km emissions will be charged £200 rather than £130, those with 151g/km emissions will be taxed £500 as opposed to £180, those with 171g/km emissions will be charged £800 rather than £295, and those with 191g/km emissions will be taxed £1,200 as opposed to £490.

Those emitting over 255g/km will continue to pay the highest possible charge of £2000 for the first year. From the second year onwards, the CO2 scale becomes irrelevant, as two flat rates will then be applied – a £0 (zero) VED rate for zero-emissions vehicles only, and a flat annual rate of £140 for all other cars. Nevertheless, the people purchasing high-polluting cars could break-even, with paying higher tax in the first year and then decreasing yearly afterwards.

What if you can Afford a Luxury Car?

For people who would like to buy low emissions or luxury cars, it will even be worse.
They don’t pay any tax currently, however, the charge will shoot up to £310 a year after the second year of operation.
Cars worth over £40,000 which produces emissions must pay £450 yearly from the second year to the fifth year which includes extra £310 every year for the first five years. After five years, the rate will change to £140.

What can you do now?

If you purchase before the new system is implemented, you get to save more in the long run, although some car models will significantly cost more to tax every year.
"You are taxed less if you purchase small petrol-powered city cars and hybrid cars before April 1."

If you're not able to purchase your low-emissions car earlier than April 1st, you might want to consider an almost new car which will keep being taxed under the old system.

Call DVLA Customer Service Number 0844 241 5511, our reps are always available to answer all your questions.


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