Prepare for 2017’s road tax band changes

It hasn’t been long since the last significant paperwork change for UK drivers, in which the driving licence paper counterpart was scrapped in June 2015, and now another change is set to take place next year. A major change in road tax prices, officially known as Vehicle Excise Duty (VED), will take effect on the 1st April 2017 and will affect those buying or leasing a new car but won’t affect commercial vehicles.

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The current regime is costing the Exchequer a fortune, as car manufacturers have cut CO2 emissions in order to benefit from the generous VED tax bands for lower-emissions vehicles. It’s thought that approximately a quarter of new cars registered don’t pay any road tax, as they fall into VED Band A for vehicles with less than 100g/km of CO2 emissions. This means that currently, new cars have to reach Band D (121-130g/km) before any significant annual road tax is charged.

However, the luxury of hardly paying any road tax on new vehicles certainly stops here.

If you’re planning on buying a new car

If you register your car after April 1st 2017 you will have to pay a one-off tax charge for the first year. The rates you will pay are decided by a heavily revised version of the current CO2-based tax band system, and will, unfortunately, mean that most buyers will see their first-year tax charge pretty much doubled.

Only zero-emissions vehicles will get away with paying nothing at all. However, for the second year onwards, the CO2 scale will be irrelevant as two flat rates will be applied. These will be a £0 VED rate for zero-emissions vehicles only, and a flat annual rate of £140 for all other cars.

Worse still, if you buy a car costing over £40,000, you will be liable to pay the £140 VED rate from year two, and you will also be forced to pay an additional supplement of £310 for the first five years.

So basically, if you’re planning on buying a new car in the near future then it’s a good idea to buy and register it before the 1st April 2017. You’ll save yourself a small fortune if you do.

If your car is already registered

Remember this is only for new cars so if you’ve already registered your car then your current road tax band won’t change, the existing VED bands will stay in place and you don’t need to do anything.

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