New Car Tax Rules 2017 – What Are They and What Do They Mean?
From the 1st April 2017, new car tax rules will come into place. The really important thing worth noting is that this change will only affect new cars. If your car was registered before 1st April 2017 then you will remain on the current car tax system and there’s no need to read our pearls of wisdom here!
If however, you are planning to buy a shiny new car this year, and that car will be registered on or after 1st April, then this change will very much apply to you.
The biggest change is there is now a flat rate for both diesel and unleaded petrol cars. Previously the government has discounted diesel cars as they were believed to be better for the environment. This thinking has now very much changed.
The tax banding in the first year is entirely based around CO2 emissions. This is measured in the amount of grams of CO2 per Kilometre (g/km).
In addition, there are different tax bandings based on how much your car is worth. A really important point is that this is based on the retail list price before you have negotiated or enjoyed any discounts or promotions from your dealer.
The First Year Car Tax Cost
The first year’s cost will be the same whatever your car is worth. If you have a look at the grid below you can see how much each level of emissions will cost in terms of car tax. If you look in your car’s brochure or on the dealer’s website you will be able to find the CO2 emissions for each model. Alternative fuels apply to hybrids, bi-ethanol and liquid petroleum gas. Electric cars have zero emissions and therefore offer the most cost effective option.
|CO2 emissions (g/km)||Petrol (TC48) and diesel cars (TC49)||Alternative fuel cars (TC59)|
|1 – 50||£10||£0|
|76 – 90||£100||£90|
|91 – 100||£120||£110|
|101 – 110||£140||£130|
|111 – 130||£160||£150|
|131 – 150||£200||£190|
|151 – 170||£500||£490|
|171 – 190||£800||£790|
|191 – 225||£1,200||£1,190|
|226 – 255||£1,700||£1,690|
To give this some context, a BMW series 2 saloon uses 109 g/km, so the first year’s road tax would be £140, but a Nissan Qashqai 4×4 uses 138 g/km so the cost would be £200.
Now these rules only apply to the first year’s road tax only. You will only be able to be one year’s worth of tax in your first year, the 6 month option will not be available. After the first year then a flat rate applies dependant on how much your car is worth. Remember the worth is based on the list price, not what you actually paid for the car.
Cars Worth Less Than £40,000
If your car’s list price is less than £40,000 then your car’s first year of road tax will be based on the car’s CO2 emissions – as above.
After the first year then you will be subject to the following flat rate:
£140 a year for petrol or diesel vehicles
£130 a year for alternative fuel vehicles
£0 a year for vehicles with zero CO2 emissions
Cars Worth More Than £40,000
As with cars worth less than £40,000 the first year is based on the car’s CO2 emissions and then a flat rate after the first year. The difference being that for the next five years in addition to the flat rate you will also have to pay an annual surcharge of £310 per year.
£140 a year for petrol or diesel vehicles – plus a £310 surcharge – total £450
£130 a year for alternative fuel vehicles – plus a £310 surcharge – total £440
£0 a year for vehicles with zero CO2 emissions – plus a £310 surcharge – total £310
After five years the car will then move to the standard flat rate as with cars worth less than £40,000 and the surcharge will no longer apply.
As you can see electric cars are definitely the most affordable choice in terms of car tax. After the first year an electric car will save you £700 across five years in comparison to the unleaded and diesel models.
If you can take in more detail, you will find it here on the government’s website.