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Vehicle Tax Rates: How Are They Going to Change this April?


As of the 1st of April, the Government’s latest amendments to the tax rate of vehicle owners is set to change, with all drivers having to pay Vehicle Excise Duty. Since being planned into the Chancellor’s budget in 2015, the DVLA have laid out their new methodology, which is set to apply to all vehicles registered from that date.

The amount you pay is dependent on the category your vehicle sits in, with regards to pollutant emissions. Aside from zero-carbon emitters (electric and hydrogen), all vehicles will have to pay £140 per year base rate. For vehicles that on average cost more than £40,000, regardless of emissions, a new fee will apply of £310 for the first five years, paid annually. The £310 charge will be reduced to £140 after the initial five years, the only exception being, that if your vehicle is a non-emitter, these cars will be free of the £140 constant tax that applies annually to all other vehicles.

The rate of Excise duty will be set via ‘CO2 bands’, with the amount of tax owed per driver being dependent on the level of emissions. This is similar to the original practices that have been put in place used to calculate the tax level for commercial vehicles, where the more you pollute, the more you pay. For example, a vehicle emitting 111-130g/km of carbon dioxide will have to pay £160, whilst a vehicle within the 131-150g/km bracket will have to pay £200 a year- on top of the ever-present £140 mentioned before. The heaviest polluting vehicles, which are above 255g/km, will in incur a £2000 fee initially, as part of the additional rate for the first five years.

The new system takes into consideration price fluctuation on various makes and models of vehicles, which will inevitably happen over the years. Your vehicle will be assessed on its value from first purchase, meaning that you can’t take advantage of the system by buying when your vehicle value depreciates.

Vehicles purchase from the end of March onwards will be divided into one of four categories, these are entitled; M, M1, M1SP and M1G. Category M represents hour standard 4 wheeled vehicles (persons only), M1 represents larger vehicles with no more than 8 seats, M1SP includes any special purpose vehicles such as caravans and ambulances and finally, M1G is for off-road vehicles, such as tractors. However, regardless of the category, new will charges will apply for all.

Questions have been raised, as to why there is the need to make changes to the law; one theory is that under the current system, many vehicles are being produced that come in below the lowest rate of tax, due to technological vehicles, resulting in the government losing out on a sizable amount of revenue. Other speculations include that the decision was motivated by the concern for the environment, encouraging the purchase of vehicles which are comparably less harmful to the eco-system. With a long-standing issue on fuel efficiency, with regards to trucks and lorries particularly, this may be a move aimed at making commercial vehicles consider the consequences more before investing in major sources of carbon pollutant gases.

With these new developments, be sure to keep in mind that you may be paying that bit extra for a pollutant vehicle, hopefully leading to a little more consideration prior to purchasing a new vehicle. Be sure to carefully research all aspects of owning a vehicle, including the extra expenses incurred, such as petrol and insurance, referring back to previous articles we’ve written for further advice.

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