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How will changes to VED pricing in 2017 affect you?

From April 1 this year, the government will be increasing Vehicle Excise Duty (VED), a levy that is applicable to owners of road vehicles. Often referred to as a “car tax”, VED is, in fact, applicable to all types of vehicles, including, lorries, vans and motorcycles. The duty is charged annually by the Driver and Vehicle Licensing Agency (DVLA).

So how will this affect you? It all depends on the kind of vehicle you drive – or plan to purchase – and the level of COemissions it produces.

VED is being increased by the Government because cars, as a whole, are increasingly producing lower emissions – which means less tax is being collected by the Treasury. VED bands from A to M will be scrapped, and a simpler method of calculation is being introduced.

Any new vehicle registered after April 1 will result in a higher rate of duty being incurred, with car owners typically paying £140.

From this point on, only electric and hydrogen vehicles will be exempt from the levy. Any car that costs more than £40,000 will incur a five-year supplemental cost of £310. Even if your £40,000+ car produces zero emissions, you will still be required to pay this fee, in addition to the £140 flat rate. When the five-year period has elapsed, owners of such vehicles will simply pay an annual flat fee of £140.

In a nutshell, the majority of vehicles registered after April 1 will incur a one-off charge for the first year. In effect, most people who buy a new car after this date will likely have their duty double.

Thereafter, a vehicle’s COemissions play no part in the calculation. Instead, owners of zero-emissions cars will continue to pay no tax, while all other drivers will be liable for a £140 flat annual rate.

If you have any questions about how the new VED duty will affect you in terms of your current car – or one that you might buy in the future, don’t hesitate to contact us for more information.

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