Buyers of lower-emission cars are expected to bear the brunt of changes to Vehicle Excise Duty (VED) car tax [if registered after] next April 2017, with those in the 91-100 g/km of CO2 band hardest hit, seeing costs over six years rise from nothing to £820.
The planned VED tax system from April 2017 will unfairly penalise low carbon cars (Image: NGC)
Research conducted by Parkers suggests that of the estimated £5.2 billion of additional revenue the new VED rules will generate by 2023, £4.7 billion will be from buyers of cars emitting 1-130 g/km of CO2, all of which are currently tax-free for the first year.
Initially, the 2017 VED system appears to be an update of the existing scheme, albeit with new bands created and others combined. Notably, only buyers of cars with zero CO2 emissions will have the ability to remain car tax-free under the First Year Rate, as any model producing even 1 g/km of CO2 will be subject to a charge from next year.
There’s a further surcharge for cars with a list price of £40,000 or higher – regardless of emissions, an annual charge of £310 from year two through to six will be imposed.
Buy a new car emitting just 99 g/km of CO2 from April 2017 and instead of enjoying VED tax-free motoring, you’ll instead be lumbered with an £820 tax bill over the first six years of ownership.
Replacing the Standard Rate sliding scale for year two onwards will hit buyers of cleaner cars and effectively provide a financial incentive to purchase models which pollute most. Zero-emission cars again remain free, but all others face a yearly bill of £140.
Read more: Next Green Car