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Tuesday, 10 January 2017

Do you remember what happened in last summer’s Budget?

No - Nor did I, but the former Chancellor of the Exchequer announced a radical overhaul of the UK’s system for taxing cars, with some going up dramatically, and it all happens from 1st April 2017.

Here’s some of the headlines:
The vehicle excise duty (VED) or road tax or road fund licence, as it’s sometimes called, will still have 13 different CO2 bands for new cars which will determine how much you pay in the first year of ownership.  But going forward only electric cars with zero emissions will qualify for the lowest band therefore being tax free.

Except for these zero emission cars any vehicle costing less than £40,000 will be paying £140 a year after the first year, regardless of whether they are Hybrid, Petrol or Diesel.

Why do you mention £40,000 I hear you ask?  Well over this figure cars will attract a premium fee of £310 a year for years two to five of ownership, regardless of the CO2 emissions, so that is £450 a year for 4 years.

Of course with Ford as a new car we don’t have much to worry about on the £40,000 list price new duty, but these changes still have a relative bearing on some of our range, for example 

Over the first four years of ownership
Example 1: Fiesta 1.0 Ecoboost if taxed before the 1st April it will be Zero but after the first of April that will become £540

Example 2: Focus 1.0 125ps Ecoboost if taxed before the 1st April it will be £120 but after the first of April that will become £560.

Although this is a big hike in yearly cost if you are paying nothing at the moment, it will have a bigger effect if you buy a car in excess of £40,000 with CO2 of over 255 as after April 1st you will be paying £2000 in the first year and £450 for the next four years.

What should I do? Well, if you don’t think you will be changing your car soon, nothing, as the tax due on your current car does not change. If you were thinking of changing your car this year act now and get one before the 1st of April 2017, and save yourself some money over the coming years.

The one thing you should do before buying any car though is to make sure you understand the new system.

VED for cars registered after the 1st April 2017
CO2 emissions in g/km
First year rate
Standard rate
Over 255

The table below is for all cars registered between 1 March 2001 and 31 March 2017.

VED Band
CO2 Emissions
Annual rate
First year rate
Up to 100 g/km
101-110 g/km
111-120 g/km
121-130 g/km
131-140 g/km
141-150 g/km
151-165 g/km
166-175 g/km
176-185 g/km
186-200 g/km
201-225 g/km
226-255 g/km
Over 255 g/km

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