/ Money, Motoring

How will the changes to car tax affect you?

Car monopoly

New Vehicle Excise Duty rules come into effect a year from today. Better known as car tax, the new rules will appear to some hybrid car owners as a cringe worthy April Fools’ piece.

In fact, as it’s 1 April, here’s a list of changes to car tax rules. Can you spot the April Fools?

  • New owners of eco cars will be charged hundreds more
  • New owners of CO2 heavy cars will be charged thousands less
  • A Bugatti Veyron and Toyota Prius will be subject to the same car tax rate
  • All cars over £40,000 will be charged an extra £310 per year, for five years
  • Some electric cars will be subject to car tax

If you’re not familiar with the new rules, you might be surprised to hear that all of the above are true.

But before I get started on explaining the ins and outs of the new car tax rules, please note that the new April 2017 rules will not be backdated. Only new cars bought after April 2017 will be affected (you’ve basically got 12 months to buy a low emission car that’s exempt from car tax).

The flat rate

Currently, Vehicle Excise Duty (VED) is purely based on the amount of harmful CO2 a car emits, meaning that any low emission car (100 g/km or less) is exempt from car tax.

After April 2017, all new cars will have two rates of car tax. In the first year of ownership, the rate is based on the amount of CO2 a car emits. But from the second year of ownership, the standard year rate kicks in – that’s £140 per year, for every car, regardless of how much CO2 they emit.

That means someone who’s bought a Toyota Prius that emits 70g/km of CO2 will pay nothing under today’s rules. But if they had bought it new after April 2017, they would pay £25 in the first year. Then with the £140 payments, they would have paid £585 in road tax by year five and £1,285 by year ten. That’s an awful lot more tax than the zero amount of tax you’d pay on any pre-April 2017 Prius.

But swap that Prius for a Subaru WRX STI, which produces 242g/km of CO2, and things get hazy. Under current rules, you’d end up paying £2,830 by year five and £5,280 after year ten.

If that Subaru had been bought after April 2017, you’d pay a whopping £1,700 in the first year but, thanks to the flat £140 rate, you’d only pay £2,260 over five years and £2,960 over ten. That saves them more than £2,000 by the tenth year.

So yes, future low emission car owners will be paying more than they were, and gas guzzling cars will be paying less than they were.

The £40,000 rule

After the first year rate, all cars that cost £40,000 from new will be subject to an additional £310 charge for five years.

Even some electric cars will be charged. Although electric cars will qualify as zero-emission vehicles and will continue to be exempt under the new rules, you’ll have to pay if the car costs over £40,000.

Electric cars costing over £40,000 will still be subject to the additional payment of £310 for five years. That’ll be a total of £1,550, despite zero CO2 emissions. Sorry, future Tesla owners.

Bugatti vs Prius

This is as close as we get to an April Fools. The first year rate is staggeringly different (£25 for Prius vs £2,000 for the Bugatti) and, unless somebody sells you a brand new Veyron for £39,999 or less, the Veyron will be subject to the extra £310 payment from years two to six.

However, when both cars reach seven years old, they will be charged the same £140 per year for the rest of their lives. So, they will at least end up on the same rate.

April Fools?

So no, this is no April Fools. This is all genuine and the new car tax rules are coming in next year.

Do you agree with these new tax rules? Will it make you buy a low emission car before 31 March, or will you be waiting for the change to happen to buy a CO2-chugging 4×4? (Or a Bugatti Veyron?)


To me it shows just how little our Gov cares about us or the environment. . . I dont believe they ever did care

I got involved with autogas a number of years ago at a suggestion of Gov. . The whole 9 yards…Approval the works
What a disaster. . .Cost me a bomb. . I had no sooner jumped on the bandwagon than the Gov bathed it’s self in heavy oil (diesel)

I can safely say I have done my bit albeit I am not perfect but I have to have one of the lowest footprints of anyone living in the near sane/near normal world/lifestyle and I am still doing so and will I hope for many years to come

I know Gov’s has had a bit of a setback with the VW scandal showing up the true colours of heavy oil but what an about turn
VW can throw their EGRs etc in the bin because long term they mean nothing. . .No longer required. . Lets all go CO2 in a big way and boil the bloody planet and lets be quick about it
Maybe I should sell the place. . .
Get ourselves a big V8 diesel American RV. . .and not worry about anyone or anything because that’s the example I see here
Why worry about the cost of funerals or care homes, , blow the lot

I havnt read any more than the intro above but if that’s the way it is they’ll not have my backing next time around and over here that’s in a few weeks. . .

We have to change as a race, , ,as in human race not continue as was let alone back pedal which this is. .

Just my thoughts

Bromley61a says:
2 April 2016

Sorry, it’s not really the Government, rather the liars and con artists at The Treasury – unelected, undemocratic and always (almost) getting their own way because THEY ARE PAID to do the sums with no-one to check on them – witness Equitable Life, Northern Rock and other rip-off fiascos.


. . . err, I don’t think you can blame the Treasury for the ruinous behaviour of the directors and management of those two institutions, Bromley61a. Their actuaries and auditors had a hand in it too I suspect.


I don’t agree with free car tax. All cars use roads, roads have to be maintained, so all drivers should pay towards the upkeep, assuming that is why we pay car tax.

But there is no reason why there isn’t a basic rate car tax then a gradient tax on the amount of CO2 cars emit that could apply to all types of vehicles that use the roads. It would be much simpler than the intro and would encourage sales of lower emmission vehicles.

Bobbie Dickie says:
3 April 2016

This is the most relevant and appropriate approach. Too obvious for elected members and their actors.

elato says:
15 May 2016

……….and why should’t cyclists pay road tax? They use the roads and cause no end of delays etc!!!


It has been the subject of debate. They would all have to be registered and given some ID on their bike; and how do you deal with children? It is after all a healthy pollution free occupation. We should promote it, shouldn’t we.

I do agree about delays when a herd of them ride side by side without leaving gaps for impatient motorists to seek refuge in when overtaking. But those delays don’t last that long, and anyway there’s probably a traffic jam, or a tractor, round the next bend.

Pedestrians also cause delays – crossing roads – and accidents – crossing roads. Perhaps they should pay a pavement tax (that might also help clear up discarded chewing gum and other litter).

Bassmanandyt says:
24 May 2016


I can’t speak for other cyclists, but when I’m commuting the 5 miles to work on my push bike, the car and motorcycle that I do pay road tax for remain at home causing no additional damage to the roads or environment. Would you care to argue on my behalf for a discount for me for all the days I cycle instead of using my car or motorcycle?

Thought not…!