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Contract Hire and Leasing Guide


New car taxation rules from April 2017
All Vehicle Contracts Contract Hire and Leasing Guide - New car taxation rules from April 2017
  • New car taxation rules in from April 2017

    New regulations come into force on 1 April, 2017. The changes were announced by former Chancellor of the Exchequer George Osborne and amount to a radical overall of the UK's system for taxing cars, known as Vehicle Excise Duty, or VED.

    The new taxation rules are still based partly on car's CO2 emissions with free taxation charges for Zero CO2 emission vehicles costing less than £40,000.

    Zero CO2 emission vehicles costing more than £40,000, will attract £310 premium charge per year from year 2 up to 5 years. This charge effects very few Zero CO2 emission vehicles with exception to the Tesla model range, where some would say £310 per year from year 2 is quite reasonable for a luxury car.

    CO2 emission vehicles over 1 and up to 255 will all incur a standard annual road fund licence of £140 payable from year 2 in addition to a £310 premium charge per year from year 2 up to 5 years for all vehicles costing in excess of £40,000.

    From April 2017 cars over £40,000 will attract a £310 premium charge per year the £40,000 is calculated from the manufactures vehicle list and option prices, and not the invoice price reflecting any discounts.

    For vehicles costing less than £40,000 the main changes are that there is now a simplified  annual road fund cost from year 2 of £140 per year with the exception of Zero CO2 emission vehicles which still remain at no cost. Year one takes on the cost levied on the vehicles emissions which effectively increases the on the road price of the vehicle as you move up the bands not dissimilar to the previous system.   

    The hardest hit cars are the lower bands under 99 CO2 emmision that previously enjoyed free VED and now incur a charge from April 2017 as you can see from the bands below.

     There are 13 different CO2 bands, which will determine the cost of the road fund licence for the first 12 months based the on the CO2 emission in the first year.

    1. CO2 0 £0 £0
    2. CO2 1 – 50 First Year £10 annually from year 2 £140
    3. CO2 51 – 75 First Year £25 annually from year 2 £140
    4. CO2 76 – 90 First Year £100 annually from year 2 £140
    5. CO2 91 – 100 First Year £120 annually from year 2 £140
    6. CO2 101 – 110 First Year £140 annually from year 2 £140
    7. CO2 111 – 130 First Year £160 annually from year 2 £140
    8. CO2 131 – 150 First Year £200 annually from year 2 £140
    9. CO2 151 – 170 First Year £500 annually from year 2 £140
    10. CO2 171 – 190 First Year £800 annually from year 2 £140
    11. CO2 191 – 225 First Year £1200 annually from year 2 £140
    12. CO2 226 – 255 First Year £1700 annually from year 2 £140
    13. CO2 over 255 First Year £2000 annually from year 2 £140

     

    From April 2017 cars over £40,000 will attract a £310 premium charge per year the £40,000 is calculated from the manufactures vehicle list and option prices, and not the invoice price reflecting any discounts.

     

     

     

     

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