New Car Tax Rules: A Complex Landscape
The introduction of new car tax rules has left many drivers in the dark, with some facing a significant increase in their annual tax bill. The rules, which came into effect on April 1, vary depending on the type, age, and make of the vehicle, leaving many motorists unsure of how they will be affected.

The Impact on Petrol, Diesel, and Electric Vehicles

The new rules apply to all car types, including petrol, diesel, and electric vehicles (EVs). For vehicles registered between 2001 and 2017, the tax will be calculated based on total emissions, escalating according to CO2 levels. This means that some drivers may face a significant increase in their annual tax bill, with some facing a hike of up to £150 or more per year.

• For vehicles registered between 2001 and 2017, the tax will be calculated based on total emissions.
• The tax will escalate according to CO2 levels, with higher-emitting vehicles facing higher tax rates.
• Electric vehicles (EVs) are now subject to a £10’showroom tax’ in their first year, and will have to pay the standard rate road tax of £195 annually.
• Low-emission vehicles, on the other hand, will see a decrease in their first-year road tax rates, with some vehicles facing a significant decrease in their tax bill.

The Changes to Road Tax Rates

The annual standard rate for road tax has increased from £190 to £195, applying to all vehicles first registered after April 1, 2017, and before March 31, 2025. The road tax exemption that was previously applicable to all electric vehicles has been abolished, with new EVs now subject to a £10’showroom tax’ in their first year.

The Impact on Alternative Fuel Vehicles

Alternative fuel vehicles, including hybrid, bioethanol, and liquefied petroleum gas (LPG) cars, are now subject to the new standard annual rate of £195. The £10 discount on the standard rate road tax for alternative fuel vehicles has also been discontinued.

The Impact on Electric Vans

Electric vans are now taxed at an annual rate of £355, the same as petrol and diesel light goods vehicles. Additionally, any electric vehicles with a list price over £40,000 will incur an extra £425 per year between the second and sixth years of ownership, a levy known as the ‘expensive car supplement.”

The Changes to Low-Emission Vehicles

First-year road tax rates for vehicles emitting between 1 and 50g/km of CO2 have risen to £110, while those emitting between 51-75g/km face a first-year road tax of £135.

What You Can Do

If you’re unsure how the new car tax rules will affect you, there are several options available. Firstly, you can use the DVLA’s online tool to find out how much you’ll be charged. Additionally, you can check the RAC website for a full list of the new VED tax bands.

What’s Being Done to Help

According to government figures, 58% of UK drivers are still taxed based on the older CO2 emissions-based system applicable to earlier models. The government has also introduced measures to help drivers who will be affected by the changes, including a road tax refund for any full months’ tax remaining.

Exemptions and Concessions

There are still some car tax exemptions and concessions available. For example, vehicles with a Statutory Off-road Notification (SORN) won’t need to pay road tax for that specific vehicle. Additionally, drivers can claim a road tax refund from the DVLA for any full months’ tax remaining.

Historic Vehicles

Historic vehicles, typically those over 40 years old, may be eligible for road tax exemption. However, this isn’t automatic – drivers must apply once their car meets the criteria.

What’s Next

The new car tax rules will continue to evolve, with the government introducing new measures to encourage the adoption of low-emission vehicles. However, for now, it’s essential to understand how the new rules will affect you and to take advantage of any available exemptions and concessions.