In April 2020, the first year of Vehicle Excise Duty (VED) more commonly known as Road Tax will change so it is now calculated based on your vehicle's carbon dioxide (CO2) emissions. The emissions will be based on WLTP figures - Worldwide Harmonised Light Vehicle Test Procedure. If your vehicle is valued at £40,000 or more, it will also be subject to new rules, which could lead to some increases in your Road Tax Costs.
These tax changes don't apply to vans or pick-ups, as they qualify for Light Commercial Vehicle (LCV) Road Tax, which is independent of car tax.
In 2017 Road Tax in the UK was changed significantly, which saw the cost of Road Tax increase significantly on a new car. If you're buying a new car before 1st April 2020, then you will pay road tax based on the system that was introduced on 1 April 2017, most recently adjusted for inflation April 2019.
If you're considering a new car after 1st April 2020, you may want to consider looking at Electric or Hybrid/ Alternative Fuel Vehicles as options as they have lower WLTP figures and associated VED costs.
It will also be worth considering the value of the vehicle you're planning on buying - is it valued at close to £40,000? If so you will want to know if any extra options are likely push you over the £40,000 threshold which also accrues increased VED costs, to allow you to make a fully informed decision.
If you would like further information, please contact us.
Using the table below, you will be able to calculate which tax band your vehicle would be in if you were to buy it after 1st April 2020. If all of these changes seem daunting, they won't affect a car that has already been registered and is liable for annual road tax under a previous tax regime.
Check your vehicle's CO2 emissions and registration date by entering its registration into the Government's Vehicle Tax Tool.
|First-Year Rate||First-Year Rate |
for non-RDE2 Diesels
|Alternative Fuel Vehicles|
|B||1 - 50||£10||£25||£0|
|C||51 - 75||£25||£110 (up £5)||£15|
|D||76 - 90||£110 (up £5)||£130 (up £5)||£100 (up £5)|
|E||91 - 100||£130 (up £5)||£150 (up £5)||£120 (up £5)|
|F||101 - 110||£150 (up £5)||£170 (up £5)||£140 (up £5)|
|G||111 - 130||£170 (up £5)||£210 (up £5)||£160 (up £5)|
|H||131 - 150||£210 (up £5)||£530 (up £15)||£200 (up £5)|
|I||151 - 170||£530 (up £15)||£855 (up £15)||£520 (up £15)|
|J||171 - 190||£855 (up £25)||£1,280 (up £40)||£845 (up £25)|
|K*||191 - 225||£1,280 (up £40)||£1,815 (up £55)||£1,270 (up £40)|
|L||226 - 255||£1,815 (up £55)||£2,135 (up £65)||£1,805 (up £55)|
|M||Over 255||£2,135 (up £65)||£2,135 (up £65)||£2,125 (up £65)|
Cars that cost £40,000 or more (after options) are subject to a further £320 annual supplement (up from £310 last financial year) that runs for five years. This kicks in after the first-year CO2-based charge, so you’ll pay the supplement from years two to six of the car’s life. This means you’ll pay £465 a year, for five years, if your car tips the £40,000 barrier. After that, annual Road Tax reverts back to the £145 a year (£135 for AFVs) charge.
*The Band K rate also applies to cars that were registered before 23 March 2006 and have an emissions figure over 225g/km.
Electric cars are still exempt from paying any car tax as long as they emit zero-emissions and are valued at under £40,000. Updates to Benefit-In-Kind (BIK) rates are coming into effect this April and will make electric vehicles more affordable than ever for company car users. It means company car owners who purchase an electric car will be charged at zero percent in Benefit-In-Kind rates. Owners of fully EV machines do not need to pay any city congestion charges also which is another major benefit for motorists.
Alongside extra electric car tax breaks, rules could soon change regarding Insurance Premium Tax (IPT) rates. This is an extra 12 percent charge applied on top of all insurance premiums and currently hits young motorists hardest. This is because younger drivers are already required to pay average car insurance prices of over £1,000 and IPT charges are added on top of this.
The Vehicle Excise Duty (VED) charged on new cars is based on CO2 emissions* (expressed in grams per kilometer (g/km)). All CO2 emission figures in g/km are from officially approved test under the WLTP (Worldwide Harmonised Light Vehicle Test Procedure) carbon dioxide emissions figures. https://www.gov.uk/vehicle-tax-rate-tables