New road tax rules: Don’t get caught out!

Up until April 1st of this year, those dashing about in low or zero CO2 emission hybrids and cleverly engineered cars – like the Tesla model S and certain BMWs – enjoyed free road tax. They possibly ever-so-slightly annoyed the rest of us too for getting such a freebie. Not anymore!

How the new road tax rules affect doctors and dentists

What are the new road tax rules?

As of the 1st April 2017 you can be as ecologically minded as you like but, if you have sought a little luxury in your driving experience, you will still be hit by the hefty new road tax rules.

Make no mistake this will affect both new and second-hand buyers – there are new rates for the first and subsequent 5 years of ownership.

There will still be a table of car bands based on emission outputs, with the zero emission angels still attracting free road tax. In the first year of ownership, the other bands will be liable for a road tax of between £10 up to an eye-watering £2,000 for the poorest emissions group.

For the subsequent 5 years, all emission bands above zero will be liable for a flat rate of £140pa (£130pa for hybrids). That doesn’t sound too bad, right? Wait for it…

Did your car cost more than £40,000 when new?

If your newly purchased car, registered after the 1st April 2017, cost more than £40,000 new – and that includes all those optional extras you merrily ticked in your excitement in the showroom – you will be hit by an additional levy of £310 per year for the 5 years following the initial year of purchase.

Add this to the first-year charge (of between £10 and £2,000) and things start to get expensive! You may need to scroll left and right if you’re viewing the table below on a small screen.

CO2 Emissions¹ Year 1 Rate¹ Year 2-6 Rate Per Year¹˜ <£40,000 Year 2-6 Rate Per Year˜ >£40,000 Year 1-6 Rate TOTAL˜ <£40,000 Year 1-6 Rate TOTAL˜ >£40,000
0 £0 £0 £310 £0 £1,550
1-50 £10 £140 £450 £710 £2,260
51-75 £25 £140 £450 £725 £2,275
76-90 £100 £140 £450 £800 £2,350
91-100 £120 £140 £450 £820 £2,370
101-110 £140 £140 £450 £840 £2,390
111-130 £160 £140 £450 £860 £2,410
131-150 £200 £140 £450 £900 £2,450
151-170 £500 £140 £450 £1,200 £2,750
171-190 £800 £140 £450 £1,500 £3,050
191-225 £1,200 £140 £450 £1,900 £3,450
226-255 £1,700 £140 £450 £2,400 £3,950
256+ £2,000 £140 £450 £2,700 £4,250

¹ Table sourced from theAA.com; ˜ Non-hybrid cars

If you buy a brand new car from a dealer, you will obviously be hit the hardest by these changes.

Even if you buy a second-hand car that was over £40,000 when new and registered after the 1st April 2017, you will still be hit with the additional ‘premium’ charge until the end of the 6th year. Indeed, this could potentially make certain cars on the second-hand market less attractive and lower their resale value.

Is the new road tax really an extra tax on the rich?

If you were about to order a new Range Rover Sport 3.0 SDV6 (£63,545 on the road), you could certainly argue as such – you would be looking at an increase in road tax from £815 to £1,700 for the first 3 years. As I’m sadly not buying myself such a car I couldn’t possibly comment!!!

But with a reported six of the top selling cars of 2017 thus far experiencing the highest rise in road tax² – including certain models of C-Class Mercedes, Audi A3 and BMW 3 Series – the road tax changes will affect many not-so-rich doctors and dentists.

Even if you don’t have an addiction for driving a car with delivery-only miles on the clock, it will hit your wallet in the coming years. Whether you decide to not let it spoil your fun or for it to be a key factor in your future car selection…the choice is yours. Either way, as with anything financial, it’s always good to know the facts.

Have the new road tax rules changed your mind on what car you will buy next? Let us know by adding a comment below

Sources: Gov.uk; What Car?; The AA; Land Rover; ² Wales Online

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