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Will you be paying more road tax on your next car?

Did you know that the rules around vehicle tax are changing on April 1 2017? It’s going to be the biggest overhaul of the road tax system since the road tax discs were made obsolete in 2014. Announced in 2015, the new Vehicle Excise Duty could come as a significant shock to anyone buying a new car after March 31. That’s because anyone buying a new car after this date will have to pay the new tax. Depending upon the car you get, you could find the amount you’re expected to pay as quote a shock…

What Is the Current System?
Currently, road tax is based on C02 emission levels and engine size. Each model of car is effectively graded and placed on a sliding scale. The higher then band, the more tax you have to pay. The lower the emissions of the car, the cheaper. Currently, low and zero emission cars are completely tax exempt.

Why Is the System Changing?
The system is changing because newer cars have much less emissions which meant that the government was not getting as much money as they have done in previous decades. Under the current system, 25% of cars don’t pay any road tax at all. This the government believe is unsustainable which is why the new duty has been brought in as a replacement.

When Does the New Vehicle Excise Duty Begin?
The new Vehicle Excise Duty comes in for any cars registered from April 1 2017.

Will My Current Car Be Affected?
If you are planning to carry on with your current car, then the new system will not affect you and you will continue to pay road tax as you do now.

How Does the New Vehicle Excise Duty Work?
It’s a little bit more complicated than the current system, but it’s pretty easy to understand once you get your head around it.

The First Year
If you buy a new car from April 1 2017, the amount of duty you pay will be based on CO2 emissions and your initial payment will depend on what band your car is placed in. This could see you pay anything from £10 to £2000.

After Year One

After the first year, the system then becomes an annual flat rate fee and the rate will depend upon the fuel that you use.
                ●Petrol and diesel cars - £140 per year
                ●Hybrids, LPG and bio-ethanol cars - £130 per year
                 ●Electric and hydrogen cars - exempt

However, cars costing over £40,000 will be required to pay £450 per year for the first five years after which it will revert to a flat fee of £140 per year.

That means, if you are thinking about purchasing a new car it may very well be prudent to do so before April 1st. This is especially the case if you intend to purchase a luxury vehicle and spend over £40,000. This could save you a significant amount of money. With all Leasecarpro leasing contracts however, Road Tax is included in the payment for the full length of the term.

Please feel free to call us on 0330 900 2600 for further information or guidance.

March 2017

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Posted on 17th March 2017 at 3:39 PM

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