Do you know about the new changes to car tax? If you do, you’re part of a minority as it’s been reported that a majority of British drivers are unaware of these new changes.
Confused.com have found that 61% of motorists are unaware of the new changes to the VED bands that came into effect on April 1st of this year (2017). They also found that just 11% of the 2,000 drivers surveyed fully understood the new rules which means that 9 out of 10 of drivers aren’t completely aware how the changes will affect them next time they register a new or used car. According to the study carried out by confused.com, those surveyed felt that not enough had been done to publicise the changes which has left many unaware of the changes.
Interestingly, 40% of those surveyed said that the new VED rules would put them off buying a 17-plate model and 57% said they would be more inclined to search the second-hand market. This is because the new VED rates only affect vehicles registered after April 1st 2017. The study also found that the cost of tax and car emissions are two of the major considerations when consumers choose a new car, with 53% taking into account the cost of tax and 43% consider the CO2 emissions a big factor in choosing their next car.
So, what are these changes?
On the 8th July 2016, the government published a policy paper on the changes to the Vehicle Excise Duty (VED) rates. This was set out in the 2015 budget by ex-Chancellor George Osborne. The changes have come about due to the fact that cars are getting increasingly more efficient and there are now more cars in the lower tax bands than there ever have been. When the previous system was introduced (the one before April 1st 2017), the average new car emission level here in the UK was 178g/km of CO2 putting them in band I. In 2003, band A was introduced which moved a lot of low emission cars into this band and thereby removing their tax contribution. This was to encourage people to invest in lower emission cars.
This worked and was great news for the environment and for us drivers. However, a new car in the UK emits, on average, 125g/km of CO2 which is quite a drop from the 178g/km of CO2. This number is further set to lower to just 95g/km of CO2 in 2020. So you can understand why the government are eager to make things a bit fairer on the lower end of the scale.
There will now be more bands within band A to represent the current car market. They have also combined some of the bands at the higher end of the scale, again to represent the market a bit more fairly.
The changes will be as follows;
The first year rates will vary depending on the CO2 emissions of your chosen vehicle. The second and subsequent years will be a rate of £140. If your car costs above £40,000, then you will have a £310 supplement added on top of the standard yearly rate. The only exception is if you have a zero emission car in which you will still be exempt from car tax. There is also an exception on Motability cars, which will still benefit from either a 50% or 100% exemption discount. You can see the new rates in the table we have provided below. You can read more about the VED changes here.
And how have those surveyed reacted to the changes? Well, 55% believe that they have been introduced simply as a way to make the government more money and just 30% believe it’s to encourage people to buy electric cars. 57% said that the changes are just another measure to make driving more expensive. RAC roads policy spokesman Nick Lyes told thisismoney.co.uk ‘Aside from the complexity of the new Vehicle Excise Duty bands, the simple truth is this – from a vehicle tax perspective, drivers who opt for a car that has very low emissions including hybrids will be worse off under than new system than before…this surely runs counter to the Government’s aim which is to encourage more of us to switch to newer, lower emission vehicles. We are concerned that the VED changes actually discourage drivers from purchasing some of the cleanest vehicles. Only new pure electric cars with a list price of under £40,000 will continue to enjoy being totally exempt from VED. However, the problem is that there is still no great consumer shift towards pure electric vehicles, with only two per cent of motorists telling us that is what they will opt for as their next car.”
Remember that these rates are now in effect, and will impact any car registered after April 1st 2017. If you have any questions about the new VED rates don’t hesitate to get in contact with us. Were you aware of the changes? And if so, have they impacted your decision on your next car? Comment below!