Major changes are coming soon in the world of Vehicle Excise Duty – or car tax, to me and you. In the Summer Budget 2015, the Chancellor announced that all new cars will be categorised in one of three new tax bands:
- Zero Emission
- Standard
- Premium (Over £40k)
From this time, the VED will be a flat rate of £140, apart from year one when the tax will stay linked to the CO2 emissions that cars produce. Premium cars will pay £310 per year for the first 5 standard rate years.
Electric cars still won’t pay any road tax at all and the premium cars will pay more. VED for older and existing cars will stay the same, with the tax possibly being increased slightly every year by the Retail Prices Index to account for inflation.
But why the changes? Many fleets are ‘going green’ due to the government incentives that have worked so well until now – company car drivers benefit from lower tax and employers are encouraged to put lower emission vehicles on their fleets, too.
The changes are due to the fact that around 75 percent of all new cars are now paying nothing for their first year of VED under the current system – the new system will provide money that will be ring-fenced in England 2020 to help build new roads and maintain existing ones.
