Back in 2015, George Osbourne announced changes to the Vehicle Exercise Duty (VED) system. It may seem like a long time ago but from April 1, the changes will come into place.
The revisions to the system will affect anyone buying a new car from April 2017 onward.
The present VED system follows a simple structure, the more carbon dioxide (CO2) your car emits, the more tax you pay each year. Owners of vehicles that emit under 100g/km of CO2 are currently exempt from road tax entirely.
The change to this formula came about due to developments in technology. When this system was initially put in place, there were few cars on the market that emitted less than 100g/km of CO2. Since then, car engines, in general, have become cleaner, so there has been an increase in the number of models qualifying for a road tax exemption. As part of the change, only zero emission vehicles will be exempt for road tax.
Overall, the change will see the first year of tax based on CO2 emission level (up to an initial cost of £2,000), but after that, all cars – aside from zero emission cars – will cost £140 a year to tax.
So, instead of spreading the cost of having a high emission car over a number of years, drivers of these vehicles will be hit with a higher cost in their first-year rate. Another change will see cars over £40,000 liable for a supplement of £310 for the first five years, on top of the £140 VED rate.
Ultra-low emission no longer enough
Currently, an ultra-low emission vehicle is defined as under 75g/km of CO2. Under the present VED system, this is enough to avoid road tax. But from April anything other than zero emission will not be enough to avoid annual charges. Instead, alternative fuelled vehicles (anything other than petrol or diesel) will pay £130 after the first year instead of the £140.
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For more information about the range of electric vehicles available for hire at a branch close to you or a destination that you’re visiting, call 0116 243 7676 today.