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Car Tax: What's new?

Following the 2015 there have been a number of updates in working out current Car Tax. From April 1, 2012, the cost of Vehicle Excise Duty (VED) or car tax rises by the cost of inflation from April 1, 2012.

Cars that emit less than 100g/km CO2 do not pay road tax.

Cars emitting less than 130g/km of CO2 will continue to pay no first year road tax (the so-called "showroom tax"). Cars in tax bands B and C will remain at the fixed rates of £20 (band B) and £30 (band C) per year road tax respectively.

Cars in other bands will see a sharp increase in the cost of their car tax.

In addition to car tax costs, the new car buyer must also pay a one-off first-year 'showroom tax'. This means buyers now have to pay up to £1,030 in the first year of purchase for cars with high CO2 emissions, while people who buy a new car with emissions lower than 130g/km of CO2 pay nothing in the first year.

The number of tax bands increased from 7 to 13 in 2009, with increased penalties for the most polluting cars, followed by further changes in April 2010.

Owners of low-emmission, high efficiency vehicles are incentivised with lower tax bills, whilst drivers of high-emission cars are deterred with steeper tax bills.

Recent press reports suggest that the Government could be offering drivers a lower rate of vehicle excise duty if they agree not to use the country's major A-roads and motorways.

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