From next month purchasers of new cars valued £40,000 and more will have to pay a five-year charge as well as the annual road tax rate, while cars registered before 1 April 2017 will not be affected
The measure was introduced to encourage people to buy low-emission cars as under the new system first year rates of vehicle excise duty (VED) will differ according to the CO2 emissions emitted.
A flat standard rate of £140 will apply in all subsequent years, except for zero-emission cars where the standard rate will be £0.
Cars purchased for more than £40,000 will gain a supplement of £310 on their standard rate for the first five years in which a standard rate is paid.
All cars first registered before 1 April 2017 will remain in the current VED system, which will not change.
The measure was first introduced in the summer Budget 2015 and are expected to raise £195m in the first year of operation 2017/18, rising to £1.4bn by 2020/21.
The new rates and bands for the post-2017 VED system are below:
| New VED system - for cars registered from 2017 | ||
| Emissions (g/CO2/km) | First year rate | Standard rate* |
| 0 | £0 | £0 |
| 1-50 | £10 | £140 |
| 51-75 | £25 | £140 |
| 76-90 | £100 | £140 |
| 91-100 | £120 | £140 |
| 101-110 | £140 | £140 |
| 111-130 | £160 | £140 |
| 131-150 | £200 | £140 |
| 151-170 | £500 | £140 |
| 171-190 | £800 | £140 |
| 191-225 | £1,200 | £140 |
| 226-255 | £1,700 | £140 |
| over 255 | £2,000 | £140 |
| * cars over £40,000 pay £310 supplement for five years | ||
Further information on VED is available here.
