Car Tax Is Changing


Car Tax Is Changing

Vehicle Excise Duty is being updated, and it’s important that you understand what exactly that means for you and your car.

Changes to Vehicle Tax for 2017

The fundamental way in which vehicle tax is calculated will be changing. This is not something to worry about, as long as you remain informed and up to date. Currently, any vehicle registered before the first of April this year (2017) will not be affected by the changes to vehicle tax. These changes were announced in 2015 with the budget proposed by the Chancellor and will come into existence for all new cars registered after April 2017.

How will the new car tax be calculated?

The vehicle licence is to be calculated based on the carbon emissions, and subsequently, the majority of automobiles will have a standard annual rate from that point forward. The rate is going to be 140 pounds, unless your vehicle has no carbon emissions whatsoever. Cars with zero carbon emissions are exempt, provided that the list price of the vehicle is less than 40 thousand pounds upon registration. If the car is over that price and has no carbon emissions, then the standard annual rate is non-applicable, but the additional rate will have to be paid for five years. The additional rate is 310 pounds, but after the five year period, the owner does not have to pay any vehicle tax whatsoever going forward.

£40,000 additional rate threshold

If the car does not have zero emissions and cost more than 40 thousand pounds, the standard rate plus the additional rate will have to be paid annually for vehicle tax. Alternatively fueled vehicles do get the benefit of a deduction, with 10 pounds being removed from the vehicle tax annually. In total, those who register newly purchased vehicles after April 1st, 2017, that cost more than 40 thousand pounds will have to pay 450 pounds per year for five years. After the end of the five year period, they will only have to pay 140 pounds, as per the changes to vehicle tax.

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