Higher Road Tax Rates for £40,000+ Cars

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.

 

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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 RateStandard 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.