An Easy Guide to the new 2017 Road Tax Changes

Any new car registered from the 1st of April onwards will be subject to new Vehicle Excise Duty commonly known as road tax to you and I.

If you’re in the early stages of looking for a new car in 2017 it will be worth a read to find out how much you will have pay in duty. 

Alternatively check on a new car quickly and have it registered before the end of March to limit the extra duty, over the lifetime of the car.

Why is the VED system changing?

It was announced by George Osborne back in the summer of 2015, to replace the historical system that had been in place from March 2001.

The Chancellor of the Exchequer found that many drivers were taking advantage of the low emission petrol and diesel vehicles that in some cases come with the first years duty free.

This left a hole in the pockets of the Treasury as low emission technology caught up with the tax system and almost 75% of new cars would be eligible for free road tax by 2017.

What’s the new 2017 road tax system?

The new rate of Vehicle Excise Duty (VED) is divided up into 13 bands and still worked out on CO2 emissions per kilometre like the old system but only cars with zero emissions and a list price below £40,000 will pay nothing in tax.

CO2 emissions (g/km) First year rate Standard rate*
0 £0 £0
1 – 50 £10 £140
51 – 75 £25 £140
76 – 90 £100 £140
91 – 100 £120 £140
101 – 110 £140 £140
111 – 130 £160 £140
131 – 150 £200 £140
151 – 170 £500 £140
171 – 190 £800 £140
191 – 225 £1200 £140
226 – 255 £1700 £140
Over 255 £2000 £140

*Cars with a list price of over £40,000 when new pay an additional rate of £310 per year on top of the standard rate, for five years then £140 after that.

A new car registered before April this year with emissions of 130g/km have been tax exempt for the first year. Then depending on the exact emissions per kilometre the price will be £20 a year for 100-110g/km.

Register the exact new car in April and the prices change, the first year is £140 and every year thereafter will be £140 so at the end of three years the total in duty will be £420. £380 more than if the car was registered the previous month.

The new scheme also has a first year fee depending on the emissions with the maximum of £2000 for cars with emissions over 255kg/km but then just the standard rate of £140 per year after that.


From April 2017 all cars registered with a list price above £40,000 will incur an extra £310 per year extra in duty for the first five years, after that it will drop to the standard rate of £140 per annum.

So, based on this new system a brand new Tesla Model S starting at £53,400 with all electric drive and zero emissions will still cost £310 per year. Another point would be that the Government only go off the list price of the car so any cheeky negotiating to get the car just under £40k will not matter.

In brief the summary of the new system, it looks to distribute the taxation more evenly across the range of vehicles available today unless your new car is completely emission free.

I’m also keen to add that the system has become a touch more difficult to understand each time it’s changed. Before March 2001 car tax was simply determined on how big the engine was under the bonnet with £145.00 for cars below 1.549 litres in capacity and £235 for those over.  

Will the Car Tax changes affect my current car?

No, your car will continue on in the current duty scheme and nothing else will be added to the total duty.

Is it worth it getting a new car now?

The short answer is yes! especially if you’re planning on keeping the car as the savings in tax can be £380 over three years even for a low emission car. If you have a make and model in mind just give the office a call on 0161 946 3500 and we’ll check for the soonest available car and have it registered before April for you.

Alternatively you can register and log into the website, configure your exact new car, submit your enquiry and we’ll check it for you.