posted 2 months ago

New VED Road Tax System From April 2017 Explained

New, United Kingdom, Vehicle Excise Duty First Year Rates, Standard Rates and Additional Rate confirmed, plus examples.

Older cars continue to be taxed via current systems

From the 1st April 2017 the Vehicle Excise Duty system incorporates various components: First Year Rates, Standard Rates and the Additional Rate. A First Year Rate is based on a car's emissions and fuel type. The less polluting it is the lower the rate. See table below.

Carbon Emissions (G/KM)Petrol & DieselAlternatively Fuelled (e.g. hybrid, bi-ethanol, liquid petroleum gas and fully electric)
0£0£0
1 - 50£10£0
51 - 75£25£15
76 - 90£100£90
91 - 100£120£110
101 - 110£140£130
111 - 130£160£150
131 - 150£200£190
151 - 170£500£490
171 - 190£800£790
191 - 225£1,200£1,190
226 - 255£1,700£1,690
Over 255£2,000£1,990


Standard Rates

A Standard Rate applies from year two to six inclusive. See below.

Petrol & DieselAlternatively Fuelled (e.g. hybrid, bi-ethanol and liquid petroleum gas)Zero Emission (e.g. fully electric)
£140£130£0




Additional Rate

The Additional Rate applies if the car had a new list price of £40,000+ - irrespective of emissions and fuel type. It applies from year two to six inclusive and is on top of a Standard Rate. The price is £310. From year seven onward only a Standard Rate applies.

Examples

Consider an example. A petrol powered vehicle has a list price of £20,000 and its carbon emission figure is 90g/km. The First Year Rate is, therefore, £100. The Standard Rate is £140 from year two to six inclusive - assuming there is no inflationary increase. The Additional Rate is not relevant as the list price is below £40,000.

Key figures:

  • year one: £100 (First Year Rate)
  • year two to six inclusive: £140 (Standard Rate)
  • year seven onward: £140 (Standard Rate)

Alternatively, a diesel car has a list price of £50,000 and its carbon emission figure is 226/km. The First Year Rate is, therefore, £1,700. The Standard Rate is £140 for year two to six inclusive - assuming no price rises. The Additional Rate is £310 from year two to six inclusive as the list price is beyond £40,000.

Key figures:

  • year one: £1,700 (First Year Rate)
  • year two to six inclusive: £450 (Standard Rate plus Additional Rate)
  • year seven onward: £140 (Standard Rate)