Vehicle Excise Duty Revamp for New Cars
The chancellor has announced that there will be changes to New Vehicle Excise Duty from 2017 in order to raise money for a new Roads Fund.
Cars that are registered after 1st April 2017 will now be subject to three bands of Vehicle Excise Duty – zero, standard and premium. The standard charge is £140 and George Osborne said it will cover 95% of all cars, with revenues from the VED being paid into the Roads Fund from 2020-21.
Vehicle Excise Duty is applicable for most types of vehicles that are used or parked on public roads in the UK. If a registered vehicle is not being used on the road, then the owner of that vehicle must provide a Statutory Off Road Notification. In 2009, the VED raised over £5.6 billion across Great Britain and Northern Ireland, proving to be a valuable source of income for the authorities. Until October 2014, every road-going registered vehicle was required to display a vehicle licence or tax disc as proof of having paid the Vehicle Excise Duty. Since then, tax discs are no longer required as each vehicle’s information is served on a centralised database.
Certain types of vehicles are exempt from paying VED, such as electric vehicles, vehicles for disabled people, vehicles that are over 40 years old, emergency vehicles, rescue vehicles and certain types of construction, agricultural, maintenance and armed forces vehicles. In 2014’s Budget, the government announced that there would be a 40 year rolling exemption, which means that vehicles built before 1st January 1975 became exempt on 1st April 2015, and so on.
The new bands that have been introduced to categorise the VED payments for certain vehicle types are based on carbon dioxide emissions and engine sizes. For cars registered before March 1st 2001, with engine capacities of less than 1549cc, the charge is £140, rising to £225 for vehicles with larger engines. For vehicles registered on or after this date, the charges are based on theoretical carbon dioxide emissions on a per-kilometre basis.
Vehicles that emit less than 100g of carbon dioxide per kilometre do not have to pay a charge, with vehicles emitting more than this paying a yearly rate of anything from £20 with no first year charge (Band B, 101-110g of carbon dioxide per kilometre) to £490 per year with a £1065 charge for the first year (Band M, over 255g of carbon dioxide per kilometre).
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