The way in which Vehicle Excise Duty (VED) is calculated has not changed significantly in over a decade. The re-established legislation is a reflection of how vehicles are envisioned to develop within the near future, with a vast emphasis on encouraging sales of zero-emissions cars. To further clarify, being the owner of a low-emission car will no longer exempt you from being made liable to pay VED.
If you have prospective plans to buy a new car within the next few months, it is vital to understand any alterations to the VED before pursuing your decision. The new-improved VED legislation is most likely to have a huge effect on the cost of the car you wish to buy, as well as the generated cost rate to run on a yearly basis.
To provide you with clarity on this subject, here is a reconstruction to encourage understanding: Under the previous rules, an all-new Jeep Renegade 1.6 E-Torq Evo 110HP Sport 5 Door with a CO2 emission rate of 141g/km would qualify for £200 VED in the first year and the £140 standard rate in years 2 and 3. Under the new legislation with over a typical 3-year PCP finance term, you will need to factor in an additional £480 VED to pay.
The table below will expose the new VED rates and the comparison against current regulations:
|Registrations until 31st March 2017||Registrations from 1st April 2017|
|CO2 Emissions (g/km)||First Year Rate||Standard Rate||CO2 Emissions (g/km)||First Year Rate||Standard Rate^|
|1 - 50||£0||£0||1 - 50||£10||£140|
|51 - 75||£0||£0||51 - 75||£25||£140|
|76 - 90||£0||£0||76 - 90||£100||£140|
|91 - 100||£0||£0||91 - 100||£120||£140|
|101 - 110||£0||£20||101 - 110||£140||£140|
|111 - 120||£0||£30||111 - 130||£160||£140|
|121 - 130||£0||£110|
|131 - 140||£130||£130||131 - 150||£200||£140|
|141 - 150||£145||£145|
|151 - 165||£185||£185||151 - 170||£500||£140|
|166 - 175||£300||£210|
|176 - 185||£355||£230||171 - 190||£800||£140|
|186 - 200||£500||£270|
|201 - 225||£650||£295||191 - 225||£1,200||£140|
|226 - 255||£885||£500||226 - 255||£1,700||£140|
|Over 255||£1,120||£515||Over 255||£2,000||£140|
|^Cars with a list price of over £40,000 when new pay an additional rate of £310 per year on top of the standard rate. This is applicable for 5 years, from Year 2 when the standard rate is applied.|
As indicated via the table for the first year, VED will continue to be calculated on CO2 emission bands. However, £0 VED will only apply to vehicles with zero-emissions, rather than to any vehicle with CO2 emissions below 131g/km as is the case for vehicles registered before April 1, 2017.
Standard rate VED which is to be payable from year 2 onward, will no longer be based on CO2 emission bands. Alternatively, a flat rate of £140 per year will apply to all vehicles; the only exception being those with zero CO2 emissions will continue to benefit from £0 VED. Furthermore, all vehicles with a list price of £40,000 or more will pay an additional rate of £310 per year including the standard rate, applicable from year 2.
We recommend buying soon to ensure your new car is registered before April 1, 2017 and therefore will qualify under the current VED scheme.
Click on the manufacturer links below to view each range. To find out more and to arrange a test drive when it is convenient for you, please enquire with your nearest franchise dealership directly.