Vehicle tax (VED) is changing. Setting the scene for industry.
The way Vehicle Excise Duty (VED) is calculated is changing for some vehicles registration from 1 April 2017. All vehicles registered before this date will not be affected.
The changes, announced by the Chancellor in the 2015 budget, set out that from next year, the first vehicle licence will be calculated on the vehicle's CO2 emissions.
The majority of vehicles will then move to a standard rate of £140 annually from the second licence.
Cars with zero emissions will not pay the standard rate of vehicle tax. However, if a cars's list price is over £40,000 at first registration, the customer will pay the additional rate for five years after the end of the first licence.
How it will work
What this will mean for the dealer
What this will mean for the customer
How you will be able to tell your customer what vehicle tax they will pay in the future
Table 1 - Vehicles included in the new scheme
|Category M||Motor vehicles with at least four wheels designed and constructed for the carriage of passengers|
|Category M1||Vehicles designed and constructed for the carriage of passengers and comprising no more than eight seats in addition to the driver's seat|
|Category M1 Special Purpose (M1SP)||Passenger carrying vehicles which are designed and constructed for special purposes. Vehicles which are type approved as M1 Special Purpose are as follows:|
|Category M1 (M1G)||Designed for off road use meeting designed criteria.|
Table 2 - VED bands and rates for cars first registered on or after 1 April 2017
|CO2 emissions (g/km)||First year rate||Standard rate*|
|1 - 50||£10||£140|
|51 - 75||£25||£140|
|76 - 90||£100||£140|
|91 - 100||£120||£140|
|101 - 110||£140||£140|
|111 - 130||£160||£140|
|131 - 150||£200||£140|
|151 - 170||£500||£140|
|171 - 190||£800||£140|
|191 - 225||£1,200||£140|
|226 - 255||£1,700||£140|
*Cars with a list price of over £40,000 when new pay an additional rate pf £310 per year on top of the standard rate, for five years.