Driving Seat

New Car Tax Changes 2018

If you're thinking of buying a new car, there are some important changes to car tax, that we think you should know about...

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.

The next government changes to VED – which is more commonly known as car tax – will be coming into force April this year, so if you’re looking to buy a new car the FAQ below could help save you a pretty penny.

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, as a result of the 2017 changes.

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 2017 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

 

For more information, we’ve included some useful links below so you can get fully up to speed with the changes to VED:

http://www.autoexpress.co.uk/car-news/consumer-news/88361/tax-disc-changes-everything-you-need-to-know-about-uk-road-tax

http://www.whatcar.com/advice/buying/ved-car-tax-changes-in-2017-what-do-i-need-to-know/