From April 2017, purchasers of new cars that are worth £40,000 and more will have to pay a five-year charge and an annual road tax rate. Cars registered before 1 April 2017 will not be affected and will remain in the current Vehicle Excise Duty (VED) system.
![pexels-photo (1)](http://www.taxexpert.co.uk/wp-content/uploads/2017/03/pexels-photo-1-300x200.jpg)
The measure was first introduced in the summer Budget 2015 in order to encourage people to purchase low-emission cars. Under the new system, first year rates of Vehicle Excise Duty (VED) will differ according to the CO2 emissions emitted. The new measure will also raise a budget of £195m in its first year of operation, rising to £1.4bn in 2020/21.
The new rates and bands for the post-2017 VED system are below:
New VED System For Cars | ||
Emissions
(g/CO2/km) |
First Year Rate | Standard Rate* |
0 | £0 | £0 |
1-50 | £10 | £140 |
51-75 | £25 | £140 |
76-90 | £100 | £140 |
91-100 | £120 | £140 |
101-110 | £140 | £140 |
111-130 | £160 | £140 |
131-150 | £200 | £140 |
151-170 | £500 | £140 |
171-190 | £800 | £140 |
191-225 | £1200 | £140 |
226-255 | £1700 | £140 |
Over 225 | £2000 | £140 |
*Cars purchased for more than £40,000 will gain a supplement of £310 on their standard rate for the first five years in which standard rate is paid.
A flat standard rate of £140 will apply in all subsequent years except for the zero-emission cars where the standard rate will be £0.