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.
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.