13 March 2017

Thinking of buying a new car?

The current road tax system set low CO2 emissions targets for new cars. But with so many cars now hitting the targets, about 75% of new vehicles would become road tax exempt this year under the current system. 

This is having a big impact on the government's ability to pay for essential road maintenance across the UK. So if you're thinking about buying a new car, here are some details you need to know about the changes.

New car? New tax

If you register a new car after 1st April 2017, you'll pay a one-off road tax for the first year of ownership, followed by a flat-rate tax for each year after that.

The amount you pay in the first year is calculated according to the CO2 emissions of your new car. The table below shows the 13 different CO2 bands. The lower your vehicle's CO2 emissions, the less you'll pay.

CO2 Emmisions (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 5 years.

CO2 emissions are only taken into account for the first year after a vehicle is registered. After that, a flat road tax rate applies.

The flat rate varies and has three categories: zero (no CO2 emissions), standard (the majority of vehicles) and premium (cars costing over £40K). After the first year, the flat tax rates will apply as follows:

Zero

Cars with zero emissions costing less than £40K are tax-free.

Those costing more than £40K will have to pay a tax of £310 for the first five years and £140 a year after that even though they have zero emissions.

Standard

The majority of cars will pay £140 a year.

Premium

Premium cars costing over 40k will be charged £310 for the first five years reducing to £140 a year after that.

Will the tax changes affect you?

They will if you're planning to buy or register your new car after 1st April. These changes only apply to cars being registered with the DVLA for the first time. They won't affect cars that have been registered before this date, so second-hand cars will continue to be taxed at the old rates.

How will this affect the cost of running your new car?

Drivers of small, low emission hybrid cars will take the biggest impact from the reforms. Tax on some models will be up to ten times more than under the current system.

For example, drivers of cars like the Nissan Qashqai - currently tax-free - will now have to pay the £140 flat rate a year, costing them a total of £520 over the first four years.

But those with higher emissions cars could end up saving a lot. If you're looking to buy a car that costs less than £40K but has emissions of 226g/km and above, you could save up to £600 over the first five years. It could also save almost £2,500 over ten years against the current system. 

If you're planning to buy this kind of car, it's worth waiting until after the reforms have come into effect. If you want to avoid the changes, make sure you register your new car by 31st March 2017.

Are you thinking about buying a new car?

Why not take a look at a Nationwide Loan?

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