Beat the Road Tax Increase
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THE NEW VEHICLE EXCISE DUTY SYSTEM IS ON ITS WAY

Massive increase in road tax charges from the 1st of April

 

Drivers of the lowest-emission petrol and diesel cars could be hit with a hike of £140 a year and those buying a car costing more than £40,000 will be forced to pay a £1,550 levy over the first five years of ownership. Yet the overwhelming majority of motorists don't know the changes are coming. More than 4,000 people took part in our online poll, which asked readers how up to speed they were about the new regime. Just 6% were fully aware of it. The survey also revealed that a mere 8% knew changes are coming – but a massive 86% were totally in the dark.

Under the current scheme, scores of different cars are exempt from road tax, or Vehicle Excise Duty (VED). That’s thanks to the fact they emit less than 100 grams per kilometre (g/km) of carbon dioxide (CO2). For cars registered after April, though, only those that produce no CO2 – fully electric and hydrogen cars – will be spared road tax. All other models registered from then will be liable for an annual road-tax bill of £140, regardless of CO2 emissions. While the first year of road tax will still be based on CO2 emissions and range from £10 to £2,000, this fee is almost always absorbed in a car’s on-the-road price – meaning it isn't usually seen as a running cost by consumers.

However, cars with a list price of more than £40,000 will also incur an additional £310 levy for the first five years of ownership, bringing their total annual VED bill to £450 during that time. The changes will affect many different models, from small city cars to large hybrid and electric SUVs.Because petrol engines generally emit more CO2 than their diesel counterparts, buyers have been incentivised to buy diesels for some time. In turn, carmakers have focused on driving down the amount of CO2 these cars emit.

The new system is also being brought in because while diesel engines emit relatively little CO2, recent research indicates other emissions – including mono nitrogen oxides and particulate matter – are more harmful than was once thought. Petrol engines, while emitting more CO2, tend to be cleaner in this regard.

It’s not all bad news, though: drivers who want to drive a petrol car but may have been put off by high tax rates are likely to find their engine of choice becomes more affordable under the new system, as the playing field between diesel and petrol becomes more level. And it'll provide another reason for buyers to consider an all-electric or hydrogen-powered car.

April's new scheme won't apply retrospectively, so whichever road-tax system was active when you registered your current car will continue to apply for as long as it's on the road.

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Motorvogue (Northampton)Ltd is an Appointed Representative of Automotive Compliance Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA No 497010). Automotive Compliance Ltd’s permissions as a Principal Firm allows Motorvogue (Northampton)Ltd to act as a credit broker, not as a lender, for the introduction to a limited number of finance providers and to act as an agent on behalf of the insurer for insurance distribution activities only.

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