Car tax changes: three quarters of new car buyers to pay more

Road tax will rise for the majority of drivers, from April 2017

Next month, the government introduces new charges for car tax. It will mean most people buying a new, efficient car will have to pay more in tax than they would have done under outgoing rules.

The proposals were outlined by former chancellor George Osborne in 2015. They are aimed at earning more revenue for the treasury, after the outgoing rules rewarded clean, efficient cars with low or no road tax. This resulted in buyers voting with their wallets and snapping up models that pumped out low levels of carbon dioxide (CO2).

Now only cars with no exhaust emissions, which means all-electric cars, will be exempt from paying car tax.

It means comparatively clean, efficient models, such as the hugely popular Ford Fiesta or Fiat 500, will face bigger bills. In their first year of registration, car tax will be based on one of 13 CO2 emissions bands. Given these cars emit 99g/km of CO2, a buyer will pay £120 in year one. From year two they will have to pay a flat rate of £140 a year. Over three years, that adds up to a £400 increase for drivers.

Experts say that around 70 per cent of new car buyers will face bigger bills for car tax. The greatest increase will be to the first year’s charge.

For example, vehicles with CO2 emissions of 131g/km rise from £130 in the first year to £200 under the new regs. Cars emitting 151g/km climb from £180 to £500. And models that pump out 171g/km increase from £295 to £800.

The tax hikes come at an unwelcome time for drivers: the cost of insurance, fuel, servicing and parts are all rising.

Tamzen Isacsson of the Society of Motor Manufacturers and Traders (SMMT), says that the only way for new car buyers to beat the increase in car tax is to buy a new, unregistered car that’s already in stock. “Dealers should be able to register a new vehicle in stock until 6pm on Friday, 31 March and drivers will still qualify for existing VED rates,” she advised.

No change for cars registered before April 1, 2017

You don’t have to buy a new car to beat the tax changes, however. Although many drivers have been unaware of the planned car tax changes, the good news is that the government is not applying the increases retrospectively.

This means any car that has been registered before April 1, 2017 will cost the same to tax as in the past.

Canny drivers could buy a relatively ‘new’ supermini, like the aforementioned Ford Fiesta or Fiat 500. Not only would it be cheaper than a new equivalent, but it would also continue to be exempt from car tax.

Those tempted by such savings can browse the Green Flag blog’s wide choice of helpful used car buying guides for some of the most popular and desirable models on Britain’s roads.

12 comments on “Car tax changes: three quarters of new car buyers to pay more

  1. Jack Goodacre May 8, 2017 3:09 pm

    This is all well and good, but according to all information given. This is for ROAD TAX.
    as ALL motor vehicles are using the roads are still causing the same amount of damage to the roads, weather Electric, Hybrid, Petrol or Diesel, so therefor, why are some vehicles paying nothing, or very little.
    Surely, a fairer way would be to have an average road tax. Excepting heavier vehicles over a certain tonnage.
    (I cannot see where the emissions come into the equations).

  2. Jim May 10, 2017 8:53 pm

    the tory money grabbers are at it again.they don’t give a dam about the public as long as they get their limos road tax paid by the working class tax payers.

  3. Ed Edwards May 13, 2017 3:28 pm

    I was asked a couple of years ago by a Brazilian friend what was the disc in the window because he noticed them on all vehicles…i explained it was a tax where all vehicles paid for new roads and maintenance of the old….today its simply used to give the rich tax breaks

  4. Mark Head May 15, 2017 8:25 am

    Tax has to come from somewhere if we want this highly infrastructure society that we live in. Road Tax is fine in concept except that it is not for roads – it just goes (and always has done, like other taxes) into a vast black hole from which all things are funded. It is right that we pay taxes (or, more rightly, subscriptions, or memberships fees, or other equivalent monies we pay for certain rewards and privileges). This real issue is openness- we need to have taxation that is clearly destined and well-managed for specific purposes so that we can see clear records of how our ‘contributions’ are being used. Perhaps our various motoring ‘voices’ should direct their attention to this, and lobby parliament for clearer, more traceable taxation and spending.

    M Head

  5. Malcolm May 15, 2017 2:10 pm

    Why don’t they abolish road tax and insurance and put the cost of both on fuel. That way vehicles that use the road more, pay more. Also ALL Vehicles would have insurance through the government. I think they do this in South Africa.

    • Toby May 19, 2017 9:45 am

      Malcolm, it’s because of the politicians that run this country. They take your money first ( V.E.D. Vehicle Excise Duty) and then decide how much of it they will use for road maintenance. Then (because they have used it elsewhere) they tell us that there just isn’t enough to cover the costs maintaining our roads. Incidently, this is the reason they changed the name of the tax from “Road Tax” to V.E.D. I agree with Mark Head, we should lobby parliament more on this.

  6. Jonathan Lincoln May 15, 2017 2:15 pm

    I believe that road tax should be put on fuel rather than on specific vehicles, we run two cars my wife has a Ford Street KA and we pay a huge £270 a year yet only cover about 1500 miles a year, which means producing less CO2 than a more “efficient” car which may cover 10,000 miles and in doing so emitting far more CO2, yet will pay less road tax.

  7. raymond May 17, 2017 2:15 pm

    the usual rip off………. I run a motorhome, the vehicle goes out on the road once every six weeks to keep the battery topped up then two holidays a year total mileage 2000/4000 mainly abroad.
    to do exactly the above my road tax for the past year was £225.00 never putting the vehicle on Sorn….. this Junes Road Tax is £245.00 perhaps I ought to consider putting the wagon on Sorn when its not required purely by rearranging battery top up periods I guess if we all do that the government would be worse off

    • James Mills May 17, 2017 2:51 pm

      Have you considered investing in a battery ‘trickle’ charger, Raymond? As you suggest, the vehicle could be declared SORN for th emost of the time, and taxed for holidays and the occasional drive to keep all moving parts in working order. For information about charging a battery, please see this blog post: http://blog.greenflag.com/2016/how-to-charge-and-care-for-a-car-battery/

  8. Martin Kenworthy May 20, 2017 11:35 am

    I see I am singing from the same hymn sheet as the above. I am paying £520 a year in road tax but average less than 3000 miles a year (I’m a pensioner and walk/cycle most of the time). Can HMG explain to me why many cars do 100K+ miles a year yet pay a fraction of what I pay ? Why shouldn’t usage (ie wear and tear on the roads) be taken into account as well as emissions ? Surely it’s not beyond government to come up with a fairer means of taxation – but on second thoughts, with this government, it most likely is.

  9. Elaine June 12, 2017 6:17 am

    This is a question really. Do people coming from abroad with there own vehicles including the lorries pay anything to drive on our roads and if they don’t wouldn’t it be a good thing to do so ?

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