Save money ahead of the April 2020 Car Tax (VED) increase
Car tax or Vehicle Excise Duty (VED) rates are increasing for many cars from 1st April 2020. Find out the reasons for these changes and how you could save over £1,000 on certain models if you choose to purchase a new car before April.
What are the Car Tax (VED) changes?
If you are a driver in the UK, you have to pay Vehicle Excise Duty or Road Fund Licence (often called car tax or road tax). The amount you pay is calculated based on the fuel type and amount of CO2 emissions your vehicle generates at the time it is first registered. Generally the lower the CO2 emission figure of your vehicle is, the lower the rate of your Vehicle Excise Duty.
A new method of testing a vehicle's CO2 emissions and fuel consumption figure, known as the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), has been introduced. This replaces the New European Driving Cycle test (NEDC) which had become outdated and often understated CO2 emissions and overstated fuel efficiency. Using WLTP provides a more realistic evaluation of your vehicle's official fuel consumption (mpg), driving range and CO2 emissions (g/km).
As a result, official CO2 emission figures for many vehicles will increase, placing them in a higher tax band to the current rate and causing an increase in the cost of your car tax for the first year.
Will a new car be less efficient or emit more CO2?
In real world terms, there is no increase in the actual CO2 emissions or decrease in fuel consumption of the same specification vehicle, regardless of when it is registered. WLTP has been implemented to provide a more realistic figure as to what to expect when driving a car as well as making comparisons between various makes and models easier. This new figure will be used to calculate car tax (VED).
When is Car Tax (VED) set to increase?
The change is set to be introduced on 1st April 2020 for Vehicle Excise Duty and 6th April 2020 for Benefit-in-Kind tax for company car drivers. The change will only affect the very first car tax payment when a new vehicle is bought and registered after these dates. The ongoing rate after the first year will continue to be a flat figure. This is £145 per year, with a £10 discount for alternatively fuelled vehicles (hybrids, mild hybrids and plug-in hybrids). Cars that have a list prices of £40,000 or more (after options) are subject to a further £320 annual supplement until they are six years old.
Fully electric cars (EVs) like the Audi e-tron are exempt from both first-year and annual car tax, though EVs such as the e-tron which cost £40,000 or more are still subject to the £320 supplement.
What are the new Car Tax (VED) bands?
Using the table below, you will be able to calculate which tax band your vehicle will be in:
|VED Band||CO2 Emissions (g/km)||First-Year Rate (petrol and RDE2 compliant diesel models)||First-Year Rate for non-RDE2 diesels||Alternative Fuel Vehicles|
|B||1 - 50||£10||£25||£0|
|C||51 - 75||£25||£110||£15|
|D||76 - 90||£110||£130||£100|
|E||91 - 100||£130||£150||£120|
|F||101 - 110||£150||£170||£140|
|G||111 - 130||£170||£210||£160|
|H||131 - 150||£210||£530||£200|
|I||151 - 170||£530||£855||£520|
|J||171 - 190||£855||£1,280||£845|
|K||191 - 225||£1,280||£1,815||£1,270|
|L||226 - 255||£1,815||£2,135||£1,805|
What is RDE2?
Many new diesel cars sit one band higher for the first year car tax rate. This means a petrol car that emits 110g/km of CO2 will cost £150 for the first year, while most equivalent diesels will be £170. The reason for this additional charge is that many diesel models across all manufacturers don't currently meet the latest emission standard, known as RDE2. This standard is yet to come legally into force and other than the £20 additional cost non RDE2-compliant vehicles will face no further penalty in future.
The examples below show the savings available on a selection of models if registered before April 2020:
|Model||First year VED amount until 31st March 2020||First year VED amount from 1st April 2020||Saving if registered before April 2020|
|A4 Saloon Black Edition 35 TFSI manual||£210||£530||£320|
|Q3 Vorsprung 40 TFSI quattro S tronic||£855||£1,280||£425|
|Q5 S line 40 TDI quattro S tronic||£530||£1,815||£1,285|
|Q8 Edition 1 50 TDI quattro Tiptronic||£1,280||£1,815||£535|
We have a wide range of new models in stock an available for delivery before the car tax increase. To find out the savings you could make by purchasing a new car before April 2020 please call us on 01202 983727.