Ready for the car tax changes in April?

Thinking of buying a new car? The road ahead could be rocky thanks to tax rises coming in April 2019…

If you’re using your own vehicle for work, you’re probably all too aware the tax it’s costing you. If you’re smart, you’re also on the ball about the tax it can save you as well.

The new rules that came into force back 2017 changed the game for everyone, and now the Road Tax rates are going up for 2019.

If you’re thinking of replacing your car or van any time soon, you’ve got some serious thought to put in, says Bradley Post of RIFT tax refunds.

What do the new VED rates mean for you?

Way back in the George Osborne days, a whole new system of Vehicle Excise Duty (VED) was kicked off, coming into force when April 2017 rolled around.

For one thing, the tax bands changed. Before, if you had a car or van with low emissions (up to 100 g/km), you weren’t paying any emissions tax on it. Even if it pumped out up to 130 g/km of CO2, you were still tax-free for its first year.

Under the new rules, though, low emissions aren’t enough. You won’t hit that zero-tax sweet spot unless your car’s completely emissions-free. That basically means fully electric and hydrogen-powered models only. As for everyone else, it depends on what you drive and when you bought it.

For petrol and diesel cars registered from the 1st March 2001 to the 1st of March 2019, you’ll be seeing a maximum tax rise of £15 a year, based on your emissions. If they’re below 120g/km, there’s no hike at all.

For emissions from 121-130g/km up to 166-175g/km you’ll be paying £5 extra. If you’re between the 176-185g/km and 201-225g/km bands it’ll be £10 more, while anything higher will run you another £15. Zero-emissions vehicles won’t be hit with any of this, of course.

If your car was registered before the 1st of March 2001, the tax you’ll pay will be based on your engine size. If it’s under 1,549cc then a £155 yearly charge will apply. Engines over that size will run you £255.

For new cars, the hike could be even higher:

• Below 76g/km: no increase.
• 76-150g/km: £5 rise.
• 151-170g/km: £15 rise.
• 171-190g/km: £25 rise.
• 191-225g/km: £40 rise.
• 226-255g/km: £55 rise.
• Over 255g/km: £65 rise

After the first year, owners of newer vehicles will pay a £145 charge for petrol and diesel cars, or £135 for “alternative fuel” vehicles. Cars worth over £40,000 are looking at a surcharge of £320 on top of the standard rate for the first 5 years.

Why is this happening?

The short answer to this is that the old system might have worked a little too well. The push toward low-emissions vehicles was so strong that the Treasury was losing out. With most new cars drawing little or no Vehicle Excise Duty, the taxman was getting worried. In fact, so much tax was being lost that George Osborne called the existing system “unsustainable”.

Bottom line: if you’ve been curious about what the new “green” vehicles have to offer, then it’s a good time to start sniffing around. If you’re a committed petrol-head, though, you’ve got some numbers to crunch and decisions to make.