VED rate change and what it means for new car buyers

As of April 1, 2017, the Vehicle Exercise Duty CO2 bands are changing for all new cars. In short, low emission cars that would previously have been VED exempt will now have a fee for the first five years of ownership. The first year fees are either less or more than the subsequent years depending on the band. The first year fees can be hefty if you buy a less economical car – anything up to a staggering £2,000 (for cars over 255 g/CO2/ km). So, this is serious stuff for new car buyers. The only new cars exempt from VED under the new scheme are zero emissions cars (totally electric).

The first year rate (£10-£2000), is followed by a yearly fee for the subsequent four years. This is a £140 flat fee, except for cars costing over £40,000, where an additional £310 is added for subsequent years, bringing the total to £450. It’s also worth noting that the additional £310 fee (after year one) applies to all cars over £40,000, irrespective of economy. Cheaper cars with optional extras that tip the price over the £40,000 threshold will be placed on the premium rate.

When the wait time on factory ordering a new vehicle is considered, there are only a couple of months left to order before you can no longer get the current rate. The good news is the VED tax only applies when buying brand new cars, so used car purchases won’t carry it.