Vehicle Excise Duty (VED), commonly referred to as car tax or road tax, will be increasing for cars registered after the 31st March 2020. This is because emission standards are changing, meaning the official emission figure that this tax is based off will be going up. Additionally, the rates for each bracket will also be going up.
To beat the tax increase, if you’re looking for a new vehicle, we urge you to take action now to ensure your car can be delivered and registered before the 1st April 2020.
VED has many names in the UK including car tax, road tax or road fund licence, but all of them are the same thing. The amount you pay for this is based on fuel type, engine size and CO2 emissions when the car was first registered.
Generally speaking, a car with higher official CO2 emissions has higher road tax. The major change to VED is not the tax bands or the amount each band costs, instead it’s to do with what band each car falls in.
Since 1990, the official test for these CO2 emissions was called New European Driving Cycle test (NEDC). A new test was recently launched called Worldwide Harmonised Light Vehicles Test Procedure (WLTP) which is a much stricter test and more representative of real world driving results. Under this new test, cars will have a higher official figure for their CO2 emissions.
For example, for a Volkswagen Tiguan Match*, the NEDC test figures is 132g of CO2 per kilometre which puts in band H, which is £210 for the first year. From the 1st April 2020, the official figure for the same car will be 159g of CO2 per kilometre which puts in band I which is £530 for the first year. This is a difference of £320, increasing the cost of buying your new car.
The use of WLTP results for calculating which band your car falls in will start for cars registered on and after the 1st April 2020
There will be a similar effect on the Benefit-in-Kind rates which affects the amount of company car tax you pay. These will come into affect slightly later on the 6th April 2020, however other changes to company car tax are also happening so we suggest you get in touch to find out more.
Below is a simple to see which band your car falls in and how much you could be paying. As you can see, just a small change on the official CO2 figures could have a big effect on the rate you pay. Additionally each tax bands rate will be going up slightly in line with inflation^.
CO2 Emissions (g/km)
First-Year Rate for non-RDE2 Diesels^
Alternative Fuel Vehicles^
1 - 50
51 - 75
76 - 90
91 - 100
101 - 110
111 - 130
131 - 150
151 - 170
171 - 190
191 - 225
226 - 255
The solution is simple. If you’re considering buying a new car in the near future then act now. To make sure you’re not caught out by the increase in VED, we encourage you to get in touch now and order as early as possible to make sure your new car is delivered before the 1st April.
*Volkswagen Tiguan Match 1.5 TSI 150PS EVO
^These rates are for existing years. The rate will be going up slightly for the tax year from the 1st April 2020 in line with the Retail Price Index (RPI)