posted 1 year ago

2017 Road Tax Rules And How To Benefit

2017 road tax changes: how it works and how to benefit financially.

New Road Tax Rules For 2017

New road tax rules kick-in from April 2017 and motorists that recognise this early could win financially. The starting point is to fully understand how the current system works, and why it is evolving.

2015 Budget Overview

Road Tax: April 1st 2001 – March 31st 2016

The current road tax system launched April 1st 2001 and expires March 31st 2016. Vehicles are taxed on carbon emissions via bands A to M. Band A is 100g/km or less and M is 255g/km or more. The system also has first year and subsequent rates. A petrol or diesel powered band J car, for example, costs £490 to tax in year 1 then £265 thereafter. An alternatively fuelled car from the same band is taxed on emissions too, but the cost is £10 less than a petrol or diesel. These bands – even when the system is replaced – continue to apply to every car registered in the relevant period. The rates are:

Band

Emissions (g/km)

First Year Rates

Subsequent Rates

A

Up to 100

£0

£0

B

101-110

£0

£20

C

111-120

£0

£30

D

121-130

£0

£110

E

131-140

£130

£130

F

141-150

£145

£145

G

151-165

£180

£180

H

166-175

£295

£205

I

176-185

£350

£225

J

186-200

£490

£265

K

201-225

£640

£290

L

226-255

£870

£490

M

Over 255

£1,100

£505

Note 1: Subtract £10 per-band for an alternatively fuelled vehicle.

Note 2: Band K includes cars that emit more than 225g/km, but were registered prior to March 23rd 2006.

Why The Road Tax System Has To Evolve

The table above reveals that cars with emissions of 100g/km or less can be taxed for free. When the system launched vehicles of this nature were rare. The vast majority of motorists contributed to the government coffers, therefore. But technology has evolved. Countless cars now qualify for free road tax and this – from the government's perspective – is financially unsustainable. It needs income from road tax to balance the nation's books. The 2017 system ensures that only models with zero emissions can be taxed for free.

Road Tax: April 1st 2017

The new road tax system is very different to its predecessor and only relates to cars registered on/after April 1st 2017. As currently, it incorporates first year rates which are based on carbon emissions. Bands A to M cost from £0 to £2,000. Subsequent costs from are flat rates defined as: “zero, standard and premium”.

Zero is for fully electric and hydrogen powered cars. Vehicles of this nature emit no carbon at the point of use. Standard rate relates to those that have a list price – when new - of less than £40,000. The cost is £140 irrespective of emissions. Premium is for cars that have a list price – again, as new – of £40,000+ and adds £310 to the standard rate. This too is irrespective of emissions. The Premium is only added for year 2 to 6. 2017 road tax rates are:

Band

Emissions (g/km)

First Year Rates

Standard Rates

Premium Rates

A

0

£0

£0

£310

B

 1-50

£10

£140

£450

C

 51-75

£25

£140

£450

D

 76-90

£100

£140

£450

E

 91-100

£120

£140

£450

F

 101-110

£140

£140

£450

G

 110-130

£160

£140

£450

H

 131-150

£200

£140

£450

I

 151-170

£500

£140

£450

J

 171-190

£800

£140

£450

K

 191-225

£1,200

£140

£450

L

 226-255

£1,700

£140

£450

M

 More than 255

£2,000

£140

£450

2017 Road Tax: How To Benefit Financially

A motorist that plans to minimise cost has to consider the best time to buy. Remember that a car with emissions up to 100g/km can currently be taxed for free (year 1 and subsequently). Countless vehicles sit in this category including sports cars. The BMW i8 – a supercar that hits 62mph in 4.4 seconds – qualifies as its emission figure is 49g/km. However, from April 2017 road tax costs £10 in year 1 then – as the list price is more than £40,000 - £450 from years 2 - 6. The total cost throughout the first 6 years is £2,260.

The Ford Mustang Fastback V8, in contrast, is best purchased under the forthcoming road tax system. This ensures road tax for the first 5 years totals £2,700 (based on emissions of 299g/km and a list price £33,995). The cost under the older system totals £3,625.