https://insidedvla.blog.gov.uk/2016/03/23/the-way-car-tax-is-calculated-is-changing/

The way car tax is calculated is changing...

The 2015 Budget Statement announced new tax rates for vehicles registered after 1 April 2017.

So, what does this mean for the motorist?

It will ONLY affect you if you buy a brand new car on or after 1 April 2017.  Tax rates for all vehicles registered before this date are NOT affected.

How does it work?

If you buy a brand new car which is registered on or after 1 April 2017, you’ll pay for the first vehicle licence based on your vehicle's CO2 emissions. The following vehicle licence will see the majority of vehicles move to the standard rate of vehicle tax which is £140 a year.

And there’s more...

If your car’s list price was over £40,000 at first registration, you’ll pay £450 a year after the first vehicle licence. After 5 years the vehicle tax will revert to the standard rate of £140 a year.

What does this mean for the motor industry?

Since November last year we’ve worked with the motor industry to ensure the changes are introduced in a timely way, to minimise the effect on customers.

We’ve undertaken lots of insight with the motor industry to gather their thoughts and user needs. This will directly feed into the way we’ll design the service to accommodate the changes. We’ll carry out the changes to meet the legislative requirements while at the same time look at ways to improve our existing services and move away from using our legacy IT system.

To manage a change of this size we’ve introduced a number of forums to look at specific areas of interest eg policy and technology groups (which are already up and running). We’ll soon have a communication sub-group too.

All these groups will feed back their progress to a steering group which will include representatives from motoring associations and manufacturers. They will be escalating any concerns and provide updates on progress. We’re already finding this approach helps to highlight issues and risks quicker – it’s already allowing us to work out what we need to do. At the same time this process will ensure everyone involved has access to all the information they need.

Need more information?  Stay with us

This is the first of many updates on how this change is being introduced. We’ll use this blog to keep you updated on progress.

We’ll also communicate through a range of channels, including Twitter, to ensure you’re kept up-to-date on these vehicle tax changes and how they affect you, as a motorist or one of our stakeholders.

42 comments

  1. Comment by Ashley Martin posted on

    The Budget 2015 Statement said the supplement on cars about £40,000 would be £310. The blog says it will be £450. Which is correct? Please advise ASAP

    Many thanks

  2. Comment by Stuart Grigg posted on

    Why change it anyway? Surely the government snatches too much money from every motorist as it is . It is blatantly obvious you are hellbent on squeezing as much money as possible from soft targets like motorists more and more . I shall just never ever buy another new vehicle .The charges might make sense if we had decent road surfaces to drive on but we don't even get that basic requirement any more and still we have to pay your increased scandalous, unjustifiable, horrendous charges. Why don't you just name it The Highway Robbery Tax since that's what you are guilty of.

  3. Comment by joseph wilson posted on

    what about disabled drivers do they have to pay

    • Replies to joseph wilson>

      Comment by DVLA digital comms team posted on

      Hi Joseph

      There will be no change to the current rules.

    • Replies to joseph wilson>

      Comment by Decking posted on

      Since when did disability mean poor. Most disabled drivers are more than capable of paying the full tax due

  4. Comment by graham driver posted on

    "It will ONLY affect you if you buy a brand new car on or after 1 April 2017."

    The sentence quoted above from the sub-header is incorrect.

  5. Comment by joathan maybury posted on

    In other words.... Only the idol rich can afford a quality car!

  6. Comment by James W Harrison posted on

    Old cars are good cars

  7. Comment by michael Hamilton posted on

    my car first registered in October 2015 and is a vauxhall astra 1.6 diesel currently pays no road tax its CO2 are less than those specified to pay road tax.
    Do I in 2017 still pay no road tax?

  8. Comment by DVLA digital comms team posted on

    Hi Stuart

    No, this only applies to cars.

  9. Comment by Steve bond posted on

    I run a 1989 Range Rover. I am paying about £260 a year. I don't think for one minute they will reduce old cars to £140

  10. Comment by john shingler posted on

    I have a freelander diesel and it brill for my needs but i pay 280 quid a year , im not high milage user so paygo would see be lot better off...tax is outdated now ..but earns gov millions

  11. Comment by Sally posted on

    Hiya,

    I'm looking to purchase a BMW E46 330 CI Sport, year 2006 - the current tax code band for this vehicle is £500 per commencing year. Due to all of these changes, will the price remain the same? Or will this in fact drop to £150?

  12. Comment by David Horsley posted on

    I understand that cars with a list price above £40000 will pay an additional yearly tax supplement. Can you confirm that the list price excludes VAT and manufacturers on the road costs?

    • Replies to David Horsley>

      Comment by DVLA digital comms team posted on

      Cars registered for the first time on or after 1 April 2017, with a list price at first registration of over £40k will pay both the standard rate of tax for the vehicle plus the additional rate of tax for 5 years after the first licence has ended. The list price includes the cost of delivery and the pre-delivery inspection, and VAT.

  13. Comment by David Horsley posted on

    I have previously asked how list price of a car is calculated for road tax purposes eg does it include VAT but have not yet had an answer. Can you clarify how list price will be calculated?

    David Horsley

    • Replies to David Horsley>

      Comment by DVLA digital comms team posted on

      Hi David,
      Yes, the list price of the vehicle does include VAT. It is the manufacturers’ list price for the vehicle, with any additional options fitted by the manufacturer. It also includes the cost of delivery and the pre-delivery inspection and VAT. It does not include the first licence fee and the cost of registration.

  14. Comment by anthonyfosborn@gmail.com posted on

    I understand from the 'Evening Standard' that £10 million has been saved by not issuing the disc and to date, £400 million has been lost revenue. It is going to need a massive army of enquiry
    agents to follow this up especially in the light of the decrease in traffic police.

  15. Comment by Darren Sheerman posted on

    Hi not totally clear I have a band c car £30 on a13 plate will my road tax stay the same in the future

  16. Comment by Ian Jackson posted on

    I tend to agree this is just another example of hidden theft by the government as they are providing no obvious benefit the the motoring public other than idiotic ventures such as HS2 and more runways for London. What about purely electric cars such as the Tesla - more than £40k but no fuel costs and no emissions? How is that type of vehicle to be rated? What is the incentive of buying hybrids to reduce emissions when we are all being lumped together.

    • Replies to Ian Jackson>

      Comment by DVLA digital comms team posted on

      Hi Ian

      The Government announced that from 2020-21, Vehicle Excise Duty (VED) revenues in England will be paid into a new roads fund, and will be invested directly back into the English strategic road network.

      The new VED system will strengthen the incentives to purchase the very cleanest cars, and creates five new bands in the 0-100 gCO2/km range to distinguish between zero-emission cars, plug-in and hybrid vehicles and efficient conventionally fuelled cars. The very cleanest zero-emission cars – that also produce no air quality pollutants – will pay nothing while higher polluting cars will see around a doubling of their rates in comparison to the current system.

  17. Comment by gordon lea posted on

    how will this effect people on mobility

  18. Comment by Melissa Knights posted on

    Can you advise if the new charges will apply to "Special Purpose" vehicles - in particular I deal with mobile cranes? Many thanks

  19. Comment by James Lannon posted on

    2 questions
    1 - Will there be a web service that dealership systems can integrate with, to calculate the RFL price when the sales person is building a sales proposal for the customer?

    2- If the car is resold as a used car when three years old, does the new owner still pay the increased rate (+£40000 when new) until the car is 5 years old?

    • Replies to James Lannon>

      Comment by DVLA digital comms team posted on

      Hi James,

      The answer to your first question, DVLA is working with manufacturers and dealers to develop such a service but it will not be available in time for the new rules in April 2017.

      Secondly, when you purchase a used vehicle that was first registered on or after 1 April 2017, you are liable to pay any period remaining for which the additional rate of tax is due. If the car’s list price when new was over £40k, the additional rate of tax is payable for a period of 5 years from the end of the first licence and start of the second.

      Hope this helps.

  20. Comment by Bill Lennan posted on

  21. Comment by Paula Wells posted on

    Here here! Rodney Elliott — 23/03/2016

  22. Comment by Steve W Scott posted on

    Prove your not robbing the tax payer by putting the road tax in at the fuel pump.
    Tax the mileage...

    Name required below... [Data base building]
    email required below... [Date base building]

    Maybe you would like to know how many hairs on my head?

  23. Comment by Raj Kotak posted on

    Good Post! Thanks for this helpful information I agree with all points you have given to us. I will follow all of them.

  24. Comment by Kevan Chippindall-Higgin posted on

    The idea of charging a supplement based upon cost rather than emissions seems strange to me. Identifiably British cars, (Jaguar, Land Rover, Aston Martin etc) are generally over £40k so our industry will face additional stress.

    Surely it makes more sense to keep the current CO2 based system but move the bands around so that low emission cars pay little, but high emission cars pay lots. Currently, the bands start low then jump at 120 grammes/km only to flatten off at the higher end. Charging all cars at £140 is really bad given the shocking state of the roads and lack of road safety investment.

    • Replies to Kevan Chippindall-Higgin>

      Comment by DVLA digital comms team posted on

      Hi Kevan,

      Evidence suggests that the first year rates of Vehicle Excise Duty (VED) are more effective in influencing people’s choice to buy efficient cars – whereas annual standard rates of VED are less effective as people place little weight on future costs. This means basing annual standard rates of VED on carbon dioxide (CO2) as the current system does, has little impact on environmental outcomes.

      The new system maintains first year rates based on carbon dioxide (CO2) but creates 5 new bands in the 0-100 gCO2/km range to distinguish between zero-emission cars, plug-in and hybrid vehicles and efficient conventionally fuelled cars. The very cleanest zero-emission cars – that also produce no air quality pollutants – will pay nothing while higher polluting cars will see around a doubling of their rates in comparison to the current system.

  25. Comment by Sandy Rankin posted on

    I Agree entirely with the tax being transferred to usage. However if we must have the proposed system I fail to see why the new rules are not applied to all cars,setting aside the first years tax . Leaves us with a very unfair two tear system unfairly taxing those before April 1st 2017
    How many hundreds of thousands did it cost in tax payers money to figure/dream this mess up. Discussed

    • Replies to Sandy Rankin>

      Comment by Digital comms team posted on

      Hi Sandy,

      The Government has reformed Vehicle Excise Duty (VED) to make it fairer across all motorists.
      At Summer Budget 2015, the then Chancellor announced that VED will be reformed for cars first registered from April 2017 onwards.
      In the new system, annual VED is a flat rate for all cars, with a £310 supplement for cars with a list price of over £40,000. Existing cars registered before April 2017 will remain in the current system. It would not be fair to introduce the new system immediately, with no notice. Nor would it be fair to retrospectively apply the new system to the cars that people already own – for example, it would not be fair to move cars paying less than £140 now into the new system.

  26. Comment by harry hillking posted on

    harry hillkingtax on fuel would be simpler and fairer for everybody.

  27. Comment by Michael posted on

    will old cars be effected,i have audi RS5 2011 current road tax is £500 on the new scale this car would be £1700. Does this mean i have to pay the first year after the change and then?

  28. Comment by Daniel Lee posted on

    In the new post April 2017 rules, if a buy a nearly new car in it's first year, I presume this means paying the first year's tax again? So this could be an extra £500+ on a 10 month old car that would no longer be payable if I waited until it was 12 months old?

    • Replies to Daniel Lee>

      Comment by DVLA digital comms team posted on

      Hi Daniel,
      No this is not the case. The first licence rate applies to the first time the vehicle is taxed and this is always at first registration. From the second time the vehicle is taxed, it is the standard rate that is paid and, if applicable, the additional rate (if the vehicle’s list price at first registration was over £40k).