DVLA Introduces 2017 New Vehicle Tax Rules


Posted on: 26 July 2017 by Liam Voors

Post the announcement of revision in vehicle tax rates in early 2017, the new vehicle taxing system in UK has been into effect since 1st April 2017.

The new rates are implied on all the cars and some motor homes registered 1st April onwards whereas there is no impact on vehicles registered before the 1st April 2017.

Underlying cause of revised vehicle tax rules

In the earlier vehicle tax structure, cars below 100gCO2/Km (Band A threshold) were not eligible for any taxes. Also, in an effort of meeting emissions targets of the EU, the average emissions of new cars have dropped from 173gCO2/Km in 2003 to 125gCO2/Km

This was resulting in majority number of cars were falling under the lower or zero rated VED bands that means car owners end up paying low tax or no tax at all.

There are some expected implications of these changes in different tax bands that may result in having some financial impact on new car buyers after 1st April 2017. With the introduction of new rates, buyers of new cars will not only have to pay tax based on CO2 emissions of the new car but will also have to pay an additional tax on basis the type of vehicle they own.

The below table will provide you the granular details of new vehicle tax slabs:

Emissions        First year rate            After 1st Year Rate                       After 1st Year Rate

G/CO2/kM                                        (Petrol and diesel vehicles)       (Alternative fuel vehicles)

0                                   £0                                      £0                                                     £0

1-50                             £10                                    £140                                                £130

51-75                           £25                                    £140                                                £130

76-90                           £100                                  £140                                                £130

91-100                         £120                                  £140                                                £130

101-110                       £140                                  £140                                                £130

111-130                       £160                                  £140                                                £130

131-150                       £200                                 £140                                                £130

151-170                       £500                                 £140                                                £130

171-190                       £800                                 £140                                                £130

191-225                       £1200                               £140                                                £130

226-255                       £1700                               £140                                                £130

Over 255                      £2000                               £140                                                £130

                                                  Source: DVLA Contact Number

Looking at the above table, it is clearly stated that car with 131gCO2/KM will be charged £200 rather than £130. Similarly for higher emissions slabs, it will be charged £500 versus £180 (earlier) for 151 gCO2/Km where as £800 versus £295 (earlier) for 171 gCO2/Km and £800 versus £495 for 151 gCO2/Km

On the other side, cars emitting over 255gCO2/Km will continue to pay £2000 for the 1st year. This is the highest possible charge across the slabs.

From second year onwards, CO2 ranges are not considered and flat tax rate structure is followed across different segments:

  • Vehicles with zero-emissions will have £0 VED (Vehicle excise duty)
  • Vehicles with petrol and diesel versions will have to pay flat tax of £140 from 2nd year onwards
  • Vehicles with alternative fuel capabilities will have to pay flat tax of £130 from 2nd year onwards

Impact of new tax rules on low emissions or luxury cars:

If anyone prefers to buy low emissions or luxury cars, there will be some financial impact on these buyers as follows:

  • If you buy a car worth £40000, you will need to pay first year tax as per CO2 scale. In second year there will be an additional £310 (for next 5 years) along with second year standard rate (£140 or £130 or £0). Hence, your total tax will be either £450 or £440 from 2nd year to following 5 years
  • From 7th year onwards, £310 additional tax will be removed and vehicle will be taxed at one of the standard rates (£140 or £130 or £0)

DVLA is highly dedicated to provide high quality support to its consumers, so if you have any questions regarding the new VED Tax rules, you can get in touch with customer service agents of DVLA at 0844 241 5511.

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