Road tax is always a touchy subject for Britain's beleaguered motorists. Not only do we pay tax to buy new cars, we pay tax on fuel, tax on parts, tax on insurance, and tax to keep it on the road too.

Recent changes to the Vehicle Excise Licence (VEL) system saw the end of tax discs. Not only that, but the buyer of a used car can no longer buy the car with the remaining tax as part of the deal - an automatic refund of all unused full months goes back to the seller. Yet the buyer has to pay from the start of the month to get their car on the road, meaning that the DVLA is quids in each time a car changes hands. 

What's Changing?

The heartache (and wallet ache!) of the UK's motorists isn't over yet. DVLA has introduced a raft of changes to the road tax system, which take effect from 1st April 2017. So what difference will this make to you?

Firstly, it's important to note that anyone who already owns a car affected by the 1st April changes will still be taxed in exactly the same way as they are now, on the CO2 emissions based scale. The changes will only affect new cars registered on or after 1st April.

Secondly, the biggest effect of these changes will be on buyers of low CO2 emissions cars. Currently, any car emitting less than 100 g/km of carbon dioxide is free of tax, but with a large range of cars now falling below that threshold, the government has clearly realised that they are missing out on a lot of revenue. Under the new system, only zero-emissions vehicles will be tax-free, meaning that pretty much only electric cars are exempt. So if you're thinking of buying a low-emissions car, get it registered before 1st April, because a car just under the 100 g/km bracket will then have to pay £120 in the first year, then £140 a year after that. 

So why different rates in year one and year two? Well, the government is trying to simplify the tax system a little, meaning that from its second year onwards everything will be taxed at £140 a year. But in the first year, buyers will pay tax on a CO2 based scale, from £10 for the lowest emissions to an eye-watering £2,000 on anything over 255 g/km. 

There's another sting in the tail for anyone buying a car with a list price of over £40,000, who will be charged an extra £310 a year for the first five years. Be aware that if you go too mad on the options list and nudge the total price over £40,000, or successfully negotiate the price of a £40k car below this level, it will still attract the extra tax based on list price.

Check the tables below:

Figure 1 shows the taxes as they were while Figure 2 shows what they will be from the 1st April 2017.

2016 Vehicle Excise Duty

Fig. 1: 2016 Vehicle Excise Duty


2017 Vehicle Excise Duty

Fig. 2: 2017 Vehicle Excise Duty

Could I Benefit?

So are there any winners in this new system? Perhaps. Buyers of a car with higher emissions, who want to keep their car several years, could see benefits from the annual flat rate of £140 a year, versus what it would have been on the pre-April system.


More Information

The changes aren't simple, so it's well worth doing some research to see what it means for you. Visit this site for more details from DVLA themselves. And if you're in the market for a new car this year, have a chat with your dealer to see how the figures stack up in your situation.

Road Tax Changes For 2017