How much do you have to pay to tax your car? From today, 6 April, the amount could change because the government has overhauled the Vehicle Excise Duty system to encourage buyers to choose zero- and low-emission vehicles.
How much you'll pay depends on what kind of car you have, how old it is, and how you want to pay. This article should help you make sense of it all.
Vehicle Excise Duty, known as VED, is a tax levied by the government on every vehicle on UK public roads and is collected by the Driver and Vehicle Licensing Agency (DVLA). It’s a major source of revenue for the government, totalling billions of pounds each year, which goes into the central coffers of the exchequer.
Although VED is often referred to as road tax, this is misleading. The tax isn’t on the road: it’s on the vehicles that use it. Road tax was abolished in the 1930s and the cost of maintaining the UK’s roads is currently covered by general taxation, not specifically VED.
However, in his 2015 budget, then-chancellor George Osborne announced that a new road fund would be set up whereby all funds raised through VED will go into the building and upkeep of the UK’s road system. This new system was implemented by Rishi Sunak in his 2020 budget, but scheduled road works are likely to be pushed back as a result of the coronavirus outbreak.
The VED system based on vehicle emissions was introduced in 2001 as part of a push to reduce pollutants being released into the atmosphere. Vehicles emitting more pollutants cost more to tax, as part of efforts to persuade drivers to consider buying cleaner vehicles.
Changes to system in April mean significant differences for new car buyers.
How VED has changed from April 2020
The changes coming into force as of April 2020 were drawn up as a means of enhancing the appeal of electric vehicle ownership.
The government has uprated VED in line with the retail prices index (RPI) for cars, vans, motorcycles and motorcycle trade licences, but the biggest change, and the one that will be felt most by motorists and traders, is the switch from using NEDC emissions testing as the basis for the various tax band tiers to the new WLTP system.
This new method is said to deliver more realistic readings for a vehicle’s fuel consumption, emissions output and driving range, and will result in vehicles moving up a band and becoming, on average, £5 more expensive to tax annually.
From 6 April, benefit-in-kind car tax has been removed for electric vehicles, as part of a move to incentivise fleet managers and company car drivers to choose zero-emission models.
Join the debate
scotty5
Please help me understand.
I thought I knew how the new system which comes in today would work but I'm finding some of the above examples confusing. So if I were to buy that Mustang today.
The Mustang is over £40k therefore an additional tax applies. It's also over 255g/km so will attract the highest 1st year tax.
I get the 1st year tax of £2175.
But where does the £560 come from? I'd have thought each year would cost £150 (std tax) + £325 ( expensive tax ) which equals £475 a year.
By my calculations, total cost over 3yr is therefore £2175 + £950. £3125 ?
405line
Car tax: what you need to know about Vehicle Excise Duty
As far as I can tell the main thrust of this is that all the company people that were told to buy diesels that poisoned us are no longer going to do so instead they can drive around with no tax to worry about if they buy an electric vehicle, that will leave the exchequer a bit short of cash so any calculations you make will probably fall short because "we" will have to pay for all the electric people who can drive around tax free. Same as it ever was, they even tried to retrospectively tax older petrol cars in 2004 however they didn't because of back bench revolt and all the abandoned vehicles that would have to be collected and disposed at tax payers expense, also don't forget just before they did that with outgoing petrol they also made 'joe bloggs' pay for the scrappage of perfectly good petrol vehicles so we could get into brand new diesel.
scotty5
Armchair expert spreads fake news again
Another useless ignorant post. Nobody was ever told to buy diesel. I'm wasting my time explaining to the stupid, but here goes anyway.
If Greta Thurnburg had been born 20 years earlier, she would have been preaching like the rest of her Greenpeace colleagues back then about the depleating ozone layer and how we were all going to die of radiation if we didn't reduce the amount of C02 being produced. In this country, the chancellor of the day Gordon Brown was given a brief to lower CO2 and in the case of the motorist, used the tax system to promote lower producing Co2 vehicles. And to give him credit, he was successful. Co2 from vehicles went down.
And for the next 15 years there wasn't a problem, we didn't complain. Then VW did something naughty, they cheated the US emissions test. Now that's very important, it's the US tests they were found to cheat where NOx levels were higher than claimed.
What's NOx? Well we over here in Europe hadn't a clue because we were NEVER interested in NOx. I've been driving for nearly 40 years and interested in cars b4 that, and I'd never heard of NOx. The figure was never published in any car related documentation I saw.
Move on a few years, and now the armchair experts like to promote themselves as always in the know. You've rewritten history by saying we were told to buy diesels which is completely untrue. Get your facts right.
And you say diesel is poisonous. And no other fuel is?
VW emissions scandal did highlight poor emissions with diesel but that's now changed. You imply todays diesel is dirty and will poison you yet you ignore the advancement in emission tech. Now whether all that tech makes diesel as financially attractive is debateable.
And you imply those older petrol vehicles were perfectly good? No they weren't, they were dirty.
X1X3
Armchair expert
Spot on Scotty5 I have also been buying diesel for forty years and won't change now, changing cars every few years and always keeping them serviced. These so-called greens? made a right mess of it all, they should have spent their time trying to get rid of old polluting cars of 10 years and older and that includes buses Trucks Vans and trains.
405line
I have
an e39 from 2002 that is ulez compliant. Just because you don't really know anything about cars and the science is your issue. The japanese and the US did not produce diesel cars en mass for just that reason. The problems with diesel are well known about and have been for 7 decades or more, pathe news has a story about it. Diesel produced nitric acid etc etc and compound of Nitrogen. You obviously drive a diesel because the government told you it was greeen and less poluting than petrol and you bought it. And that's big D for dunces like you.
si73
We were encouraged to buy low
Personally I don't vilify diesel, it still has its place for high mileage or long distance drivers and obviously as a tow car, but why would I want a diesel for doing 5-6k per year I don't know, and to be fair it took me until 2014/15 to be able to afford my first <120g/km car, so less than £30 rfl.
The new tax rules which don't promote low co2 cars is very odd in my opinion as we still want low emissions not just zero as the EVs don't yet suit everyone.
Aidan
Car Tax
Just don't understand why the government keeps changing all the car tax rules and regulations , it is an absolute shambles especially if you are looking for a used car , can they not for once keep it simple and straitforward so that at least some motorists can
Aidan
.....and straightforward so
.....and straightforward so that at least some motorists can make the right choices when it comes to the age of the vehicle and potentially hundreds of pounds difference in tax between exactly the same car just because it is a year newer !. How hard can it be to have the same basic setup and just allow small changes to take account of more lower emission vehicles on the road !.
LP in Brighton
Why complicate and confuse?
So now we have at least five different methods of applying road tax depending on the age of a vehicle, with wide disparity in methodology and cost. The system is totally unjust, positively encouraging the use of older gross polluting models and discouraging some newer zero emission ones.
Surely the simple answer is to adjust fuel tax so that motorists travelling high mileages using dirty fuels and heavier vehicles pay most, and those travelling shorter distances with cleaner fuels and lighter vehicles pay least?
si73
I've often thought the same,
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