Buying Tips

New Car Tax Changes 2018

In April 2017, the government made changes to VED (Vehicle Excise Duty) which affected the amount of car tax you pay on new cars, with an estimated 95% of new car owners affected by the changes.

From April 2018, the government will be rolling out more changes that will again see changes to new car tax brackets.

2018 Car Tax Updates

During the announcement of the Autumn Budget, Chancellor Philip Hammond stated that from 1 April 2018 all new diesel cars will face going up a VED band if they fail to meet the latest Euro 6 emissions standards under real-world testing.

Motorists who drive a company car will also see slight changes after April 2018 as the company car tax levied on diesel cars will increase from 3% to 4%. These alterations will be used towards the new £220 million Clean Air Fund, designed to better air quality across the UK.

If you’re wondering if this affects you, you’ll be happy to know that the changes only apply to new diesel cars (not vans or commercial vehicles) and doesn’t affect the subsequent £140 yearly fees all cars have to pay after the first year.

The table below details how the changes will impact the diesel tax bands. Cars failing to meet the Euro 6 standards are likely to pay anything from £15 to £500 more in first year rates.

New diesel tax bands from April 2018

CO2 Emissions (g/km)	Current First year rate	First year rates for non-real world Euro 6 standards complaint diesel cars
0	£0	N/A
1-50	£10	£25
51-75	£25	£100
76-90	£100	£120
91-100	£120	£140
101-110	£140	£160
111-130	£160	£200
131-150	£200	£500
151-170	£500	£800
171-190	£800	£1,200
191-225	£1,200	£1,700
226-255	£1,700	£2,000
Over 255	£2,000	TBA

Note: If you’re looking to buy a new car and want to know how you’ll be affected, contact your nearest Jardine dealership for assistance.

WHAT CHANGES HAVE ALREADY BEEN MADE TO VED?

Previously the amount of car tax we paid depended on what VED tax band a vehicle fell into, with each band being defined by CO2 emission levels. As a result, people who owned low emission vehicles paid less tax, or no tax for some vehicles, but those who drove high emission vehicles paid more.

However, as of April 2018 only hydrogen and electric cars are now exempt from paying car tax. All other cars are charged a one-off first year payment, moving to an annual standard flat rate of £140 from year two.

In addition to the flat rate payment, cars that cost over £40,000 are required to pay an additional £310 for the first five years, totalling £450 per year.

WHEN DID THE VED CHANGES TAKE EFFECT?

The previous changes for new cars bought on or after April 1st 2017 have now taken place, and we now wait for 2018 changes to be implemented on 1 April 2018. So, for example, those who take delivery of a new car in March 2018 or before, will not be charged under the new 2018 rates.

WILL THE CHANGES AFFECT THE AMOUNT I PAY FOR MY EXISTING CAR?

No. The existing VED rules will only apply to cars registered on or after 1 April 2018 and therefore will not affect the tax rate for your existing car.

WHO WILL FEEL THE BIGGEST IMPACT?

Ultimately, all buyers of newly registered cars after this date will be affected in some way unless purchasing a hydrogen or electric car under £40,000. It is important to note that, although zero emissions vehicles still had a £0 standard rate, owners of zero emission vehicles valued at over £40,000 would be required to pay an additional rate of £310 per year for the first five years only.

The biggest impact was for buyers of cars with below 100 g/km of CO2 emissions who would ordinarily have paid very little or no tax at all. These low-emission petrol, diesel and hybrid cars were exempt from VED. Calculations show that these drivers paid up to nearly nine times the amount that they used to pay.

Conversely, buyers of cars with high CO2 emissions were the biggest savers in the long term thanks to the new rules, despite a higher first year rate.

The following table breaks down the costs for the new VED tax bands from April 2017 - 1 April 2018:

CO2 Emissions (g/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 valued at £40,000 or more paid a £310 yearly supplement for five years