Changes to the Road Tax from 1st April 2018

After the shake-up of UK’s car tax system in April 2017, further changes have been implemented starting from the 1st April 2018. This includes the introduction of the new Vehicle Excise Duty (VED) rateable tax.

VED changes from the 1st April 2018

The new rules introduced apply only to cars and not commercial vehicles, although the company car tax levy for diesel cars is increasing by 1%.

Cars must meet the Euro 6 emissions standards when tested on the RDE new real-world emissions regime (RDE), to avoid extra costs.

Currently, no new diesel cars conform to the RDE standards, so additional fees will apply to all new diesel sold. This may affect around 2 million new cars, closer inspection of the figures by HM Treasury reveals that some ‘cleaner’ diesel cars will cost more to tax than an older, dirtier model.

Additionally, new diesel cars will rise one tax band this may impact some significantly.
Petrol vehicles are also seeing a rise in their road tax banding too.

VED Simplified

At present road tax is based on the system introduced in April 2017 when buying a new car.

The rate of the road tax paid is calculated against: if your vehicle is electric, a combustion engine (petrol or diesel) powered or has an alternative fuel source (plug-in hybrid, LPG, ETC).

Basing road tax costs for the first years CO2 emissions translates to electric cars paying £0 and the highest pollution vehicles paying as much as £2,000. Following the first twelve months of ownership of your car, the second year rate will be based on one of three standardised rates.

Electric £0
Alternative Fuel Vehicles £130
Most Petrol / Diesel Vehicles £140

Cars costing more than £40,000 regardless of their emissions, draw an additional ‘Premium' expense of £310 for years two to six of ownership.

Used cars registered before 1st April 2017

If a vehicle was purchased and registered before the 1st April 2017 or a used car was registered before the 1st April 2017, they will continue to be taxed in line with the old system of CO2 emissions and so are unaffected by the recent changes.