New rules for car tax (Vehicle Excise Duty) come into force this year and unfortunately, it can mean a substantial hike in tax for some drivers if your car was first registered on or after 1 April 2017, especially if your car is a diesel vehicle.
The new rules are said to be ‘challenging’ by industry experts.
So, how does the system work?
The Government states that car tax for the first year is based on CO2 emissions.
It could be as low as nothing, or as high as £2,000 and there is a sliding scale in between. For the second and subsequent years, the amount of tax paid is fixed at £140 for petrol and diesel vehicles.
It is £130 for alternative fuel vehicles such as hybrids, bioethanol and LPG. It will be nothing for vehicles with zero emissions.
Many of the above changes happened last year, but many drivers who bought new last year will see the new second year charges apply to them for the first time.
What are the new changes in 2018?
All new diesel cars from April 1 2018 will face going up a band if they fail to meet the latest Euro 6 standards under real world testing.
Experts say a new Ford Focus might see an increase of £20 for the first year rate, while a Porsche Cayenne will see a rise of £500.
Diesel vans and commercial vehicles are exempt from the changes.
Diesel drivers in their first year with genuine zero emissions will pay nothing. Those with emissions over £255 will pay £2000.
Everyone will revert to the flat rate of £140 in the second year.
What if your car is expensive?
All cars that cost more than £40,000 attract an extra premium fee of £310 for year’s two to six of ownership, regardless of emissions.
It is the final price list of the car that determines if it passes the threshold before the deduction of any discounts is taken into account, so if you buy a cheaper car and add many extras you still have to pay the premium fee.
CO2 emissions (g/km) Current first year VED rates First year VED rates for diesels bought from April 2018 not meeting real world Euro 6 standards.
| CO2 Emissions (g/km |
Current first year VED rates |
First year VED rates for diesels bought from April 2018 not meeting real world Euro 6 standards |
| 0 |
£0 |
N/A |
| 1-50 |
£10 |
£25 |
| 51-75 |
£25 |
£100 |
| 76-90 |
£100 |
£120 |
| 91-100 |
£120 |
£140 |
| 101-110 |
£140 |
£160 |
| 111-130 |
£160 |
£200 |
| 131-150 |
£200 |
£500 |
| 151-170 |
£500 |
£800 |
| 171-190 |
£800 |
£1,200 |
| 191-225 |
£1,200 |
£1,700 |
| 226-255 |
£1,700 |
£2,000 |
| OVER 255 |
£2,000 |
TBA |
New diesel tax bands from April 2018
Any cars that were first registered before 1 April 2017 will continue to be taxed in the same way as they currently are, and these new rules will not apply. It means that in many cases the amount being paid is higher than the flat rate of £130 or £140 for newer cars. Against that, the much higher rate of tax for the first year will not have been paid on these older cars.