The way cars are taxed will change from April 1st. If you’re buying a new car, you could pay a lot more than under the old system. But what’s changing with car tax from April 2017 – and by how much?
Car tax from April 2017 explained
The car tax changes that come in from April 1st only affect cars that are registered on or after April 1st. That means new cars. If you already have a car or you’re buying a second hand one, you’re not affected.
If you’re buying a new car that produces a low level of CO2 emissions, but isn’t zero emission, you will pay a lot more in car tax than you would have done before April. The extra amount you’ll pay rises sharply if the car is expensive (more than £40,000) as you have to pay a surcharge for the first few years you own the car. And even if your car is zero emission, if it costs more than £40,000 you’ll have to pay tax, whereas previously the car tax rate would have been £0.
SAVVY TIP: According to What Car? magazine, it’s the ‘list price’ that determines whether or not you have to pay the premium surcharge (for cars costing over £40,000). It says that optional extras could push the price over £40,000, and that if you negotiate a discount afterwards, that won’t affect the car tax you pay because it’s the list price and not the price you actually pay that sets the tax level.
Car tax bands from April 1st
If you buy a new car from April 1st, you’ll pay two different rates of car tax. There’s one rate for the first year and a different rate for years two onwards. If the car costs more than £40,000, there’s an additional premium on the car tax which you’ll pay from years two to five inclusive.
It’s quite complicated because the car tax you’ll pay in the first year will be one of 13 different bands, based on emissions. From the second year onwards, cars will be taxed on a zero basis (you pay nothing), an ‘alternative fuel’ level (of £130 a year) or a standard level (of £140 as set in tax year 2017 – 18). There’s also a premium surcharge of £310 which you pay if your car costs more than £40,000. You only pay this surcharge for four years.
SAVVY TIP: Alternative fuel cars include hybrid cars, those powered by LPG (liquid propane gas) and those powered by fuels such as bioethanol.
The standard car tax bands from April 1st are:
- 0gms CO2/kilometre: £0 car tax in year 1, £0 in year 2 onwards.
- 1 – 50gms CO2/kilometre: £10 car tax in year 1, £140 in year 2 onwards.
- 51 – 75gms CO2/kilometre: £25 car tax in year 1, £140 in year 2 onwards.
- 76 – 90gms CO2/kilometre: £100 car tax in year 1, £140 in year 2 onwards.
- 91 – 100gms CO2/kilometre: £120 car tax in year 1, £140 in year 2 onwards.
- 101 – 110gms CO2/kilometre: £140 car tax in year 1, £140 in year 2 onwards.
- 111 – 130gms CO2/kilometre: £160 car tax in year 1, £140 in year 2 onwards.
- 131 – 150gms CO2/kilometre: £200 car tax in year 1, £140 in year 2 onwards.
- 151 – 170gms CO2/kilometre: £500 car tax in year 1, £140 in year 2 onwards.
- 171 – 190gms CO2/kilometre: £800 car tax in year 1, £140 in year 2 onwards.
- 191 – 225gms CO2/kilometre: £1,200 car tax in year 1, £140 in year 2 onwards.
- 226 – 255gms CO2/kilometre: £1,700 car tax in year 1, £140 in year 2 onwards.
- 256+gms CO2/kilometre: £2,000 car tax in year 1, £140 in year 2 onwards.
Car tax bands for cars before April 1st
Depending on the amount of emissions your car produced and when it was first registered, you could pay between £0 and £535 a year in car tax. Those car tax rates apply if it was registered between March 1st 2001 and March 31st 2017. You can see a full table of car tax rates for cars registered between 2001 and 2017 on the Gov.uk website. For cars registered before 1st March 2001, you’d pay either £150 or £245 a year, depending on the engine size. You can see the car tax bands for cars registered before March 2001 on the Gov.uk website.
Which cars will become much more expensive to tax?
If you’re thinking of buying a zero emission car, you won’t pay any car tax under the new rules, unless it costs more than £40,000. You can find a list of zero and low emission cars on the website Nextgreencar.com. Make sure you pick one with zero CO2 emission if you want to avoid paying car tax.
But if you buy a low emission car, you’ll pay more than you would have done under the old rules.
What Car? Magazine has worked out how much car tax you’ll pay if you buy one of the popular models, before and after April 1st, over the first three years.
- A Hyundai i10 1.2 87 SE would cost £60 in car tax over three years (£0, then £30 for two years) under the rules before April 1st. Under the new system you’d pay £440 in car tax (£160 then £140 for two years).
- A Skoda Fabia 1.2 TSi 90 SE would cost £40 in car tax over three years (£0, then £20 for two years) under the rules before April 1st. Under the new system you’d pay £420 in car tax (£140 then £140 for two years).
- Nissan Qashqai 1.5DCi 110 N Connecta would cost £0 in car tax over three years under the rules before April 1st. Under the new system you’d pay £400 in car tax (£120 then £140 for two years).
There’s a full list of 12 popular cars and how they’ll be affected by car tax changes on its website.
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