2017 road tax rules explained

Published 13 January 2017

From 1 April 2017, all new cars will be taxed against three new VED bands - zero, standard and premium - with taxation calculated on a combination of emissions and the list price of the vehicle. 

This means that only cars that emit zero CO2 and cost less than £40,000 to buy new will qualify for zero VED. The majority of petrol and diesel cars will pay a standard rate of £140 a year, while hybrids will pay slightly less, £130 per year.

As well as new VED bands, the government is introducing new first year rates, which are calculated on the CO2 emission levels. Most family car buyers will pay between £100 - £160 for the first year rate, while the most polluting cars (255g/km+ of CO2) will pay as much as £2000. All cars registered before April 1 2017 will continue to be taxed against the old CO2 emission levels. 

How much is my road tax?

Looking for a tax free car before the new rules come into force? Top 10 cars to buy before the VED changes

How will the new VED rules affect me?

The new rules will only affect new car buyers. The current VED bands - which are taxed against CO2 emission levels - will remain in place for all cars registered before the 1 April 2017. This means cars that emit up to 100g/km of CO2 (band A) will continue to pay zero VED. The rates for other bands (B - M) will most likely rise with inflation. 

Will electric car owners have to pay road tax? 

Most new electric vehicles will continue to qualify for zero VED for the foreseeable future. However, electric cars that cost more than £40,000 to buy will be liable for the premium car tax rate. That means owners will pay nothing for the first year rate and £310 for the following five years. Once the car is older than six years, it will again qualify for zero VED.

Tell me about the new VED bands

They're surprisingly simple. 'Zero' emission cars pay nothing, 'Standard' cars pay £140 after the first year and anything that costs more than £40,000 to buy will pay an additional premium of £310 on top, for a total of £450, after the first year. There are also new first year rates, spanning from £10 to £2000, depending on how much CO2 the car produces. 

Ved -rates _530x 287

Will owners of expensive cars be worse off?

Some will, given the hike in the first year rate, but a number of polluting cars will benefit from the new system. Buyers of expensive hybrids will be punished, although the government claims that 95 per cent of petrol and diesel car owners will pay £140 a year. 

How will this impact owners of hybrids and low emission vehicles

Badly. All hybrid buyers will have to pay for road tax, although it won't be quite as much as petrol or diesel cars. Instead, a new first year rate will be introduced and owners will then be required to pay £130 for every year after - a move that will add up to £500 to the long-term running costs of some of Britain’s cleanest and most efficient cars. However, if you already own a hybrid (or buy one before the 1 April 2017) your VED bills will remain unchanged.

Is the government going to make more money out this new system?

Even by the government’s own predictions, the new VED system will net an additional £1.4 billion over the next four years. There is some good news though; all of the money raised from VED should eventually be used to improve the UK's roads 

What about vans?

VED for commercial vehicles remains unchanged, for now.

And classic cars? 

No change there either. Owners will continue to pay the standard VED rates for pre-2001 cars.


Roger O'Brien    on 20 January 2017

Do you honestly believe they will spend this on improving the roads?
I don't think they will even spend 50% of it. - Despite their promises.

TJT    on 22 January 2017

When will it ever end

Paul Milsom    on 22 January 2017

Why is this all calculated on Co2 levels? i can only presume that it was because of the now disproven theory that Co2 is a pollutant. The Global Warming theory people have got a lot to answer for, without Co2 we would all die, very quickly, many scientists say that due to our misguided actions the planet is actually suffering with a shortage of Co2 , being as all greenstuff (trees,plants etc) need it to convert to oxygen. DVLA should be PAYING US for providing the Co2 needed to keep the planet flourishing. This is a fraudelent system, run by a fraudulent DVLA . (buy tax on the 28th and forfeit the previous 4 weeks scam) how much longer can these people hold out robbing us ... this has to end..

Engineer Andy    on 29 January 2017

When exactly DID CO2 be proven as NOT being a 'pollutant'? The more sensational right-wing media are in my view just as bad as the left ones for putting out stories (and not facts) to suit their own politicial opinions.

Your comments sound like they are from someone who perhaps needs to read up on the (proper) science and not just some hack's/politician's opinion dressed up as facts.

Martin Davies    on 10 February 2017

VED or Road Road Fund tax (call it what you will) should be payable according to usage. The roads are a utility. The more you use them, the more you should pay, like your gas or electricity and water etc. The crazy, unfair, illogical and frankly scurrilous system we have have at the moment where you pay the tax in advance based on the assumption of how much your vehicle may pollute the atmosphere, is mad. As things stand, take two identical vehicles,one does 5000 miles a year, the other does 10,000 but the owners pay the same tax. The second pollutes twice as much as the first, so logically should pay twice as much tax.
Also hybrids and electric cars cause as much wear and tear to the roads and take up just as much space as petrol or diesel cars and yet get away with contributing nothing. Congestion is congestion; the means of propulsion is irrelevant.
Martin Davies

Richard Tanner    on 16 February 2017

Car tax (VED) should be attached to fuel for many obvious reasons. The only point against it is that the small car low mileage motorist would not then be able to subsidise the high mileage and/or gas guzzling motorists.

As a small car low mileage user I could live with that.

pancellorum    on 18 February 2017

How unfair the whole system will be...two different Levels.
Existing cars to stay the same and then a whole new list, for new cars.

My own car comes in the 130/150g/km and will stay on the same on the Old system and will be £185. Yet on the New system, it would only be £140.

Mezz the Ancient    on 19 February 2017

As always the Government screwing the people so they can waste the money. Like HS2!

DrTeeth    on 9 March 2017

Let's just say that CO2 is responsible for global warming, which I do not believe. The whole point of these taxes should be to reduce pollution and congestion. They are set at a level where they will not do that and just bring in money. THAT is the scam.

Peter Titmus    on 3 April 2017

It is truly amazing how so many people fail to associate tax with public services that is to say running a country..
These people want every public service available, do not accept public service cuts but still believe that taxes should be decreased. Dumb I call it!

anthony bowers    on 5 April 2017

Totally agree with Martin Davies, put the tax on fuel, end of story, I worked for the RAC as a patrolman mechanic back in 1965-68 and they asked or tried to get the government of the time to do just that, it would have amounted to 1 penny a gallon back then but there would have been less fiddling as everybody would have had to buy fuel, but back to the present scrap the road tax put it on the fuel that way if you want and can afford a 5ltr car you will pay your way , and the drivers who only drive 20 miles a week will be better off why should they pay the same as someone who drives 1000 miles a week ? that's my gripe over and the only sensible way forward to reduce pollution and fair way.

michaelcarroll    on 14 April 2017

I have owned a Nissan Tino 2001 from new.16 years car tax @ av £250-£280 per year
is £4000. My car is now valued at £250 and the new tax is £280 for 186g/km of CO2.
The car tax for a car after 1st April 2017 with 186g/km of CO2 is £140.
We are being lied to again about the Government's concerns for pollution.
The diesel cars that ran tax free during this time I paid the full amount of tax
are not the ones I sympathise with.

gerry1945    on 27 April 2017

Anthony Bowers liked your comment and it made a great deal of sense but all governments just seem to be paranoid about charging Road Tax. I would like to know how many drivers do not pay it now they have abolished the windscreen tax disc I for one would like to go back to the disc.

GMB1961    on 13 July 2017

How will personal imports be taxed?
Date of first registration , or date of first registration in the UK.

   on 27 July 2017

So ok then there going to make us all have electric cars and vans, what about lorry's
aeroplane's and diesel trains are they going to make sure they go electric, so does that mean every person who drives to the uk will be driving electric car, we will see

William Barnes    on 18 October 2017

Put the tax on fuel.
The only fair way and everyone pays.

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