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.

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