Vehicle Excise Duty (VED) – often known simply as ‘road tax’ – is applied to the vast majority of vehicles on UK roads today.
The changes due to come into effect in April 2020 are some of the most significant yet, thanks to the impact of the new WLTP and RDE tests introduced over recent years.
Why have new tests been introduced?
The new WLTP and RDE tests aim to more accurately measure the emissions and fuel efficiency of every new model on the market, calling time on the often inaccurate figures that the outgoing NEDC test produced.
The tests are designed to be far more reflective of how a car is used in the ‘real world’, and should help you get a better idea of the potential environmental impact and running costs of any new vehicle you’re thinking about buying.
What impact will the new tests have on a vehicle’s VED?
For a lot of new vehicles, the new tests mean they’ll be placed in a higher ‘first-year’ VED band than before, due to WLTP and RDE giving measurements that are more reflective of real-world use.
It also means a potential hike in BIK – or Benefit-In-Kind tax – placed on company car users, leading to an increase in the number of business users choosing to drive hybrid or electric vehicles due to the more favourable rates available.
The additional tax on vehicles with a list price of over £40,000 remains in place, which is applied from the second year to the sixth year of a vehicle’s life. That means if a new vehicle is listed with a price of more than £40,000 by its manufacturer at the time of first purchase – regardless of the price negotiated – it is subject to the extra tax, on top of that vehicle’s normal road tax.
This extra tax applies to zero emissions vehicles such as BEVs too, so although an electric car emits 0g/km CO2 and hence is subject to zero road tax, if its original purchase list price is over £40,000, it’ll still be subject to a £320 premium.
Do the new VED bands affect the car I have now?
No. The incoming changes only affect new vehicles that are bought or registered after April 1st. If you purchased your car between April 2017 and April 2020, it’ll still be subject to the same VED band as before. Similarly, cars purchased before April 2017 will be subject to the same emissions-based VED band.
What does WLTP mean for electric cars?
Just like before April 1st 2020, all zero-emission vehicles – including all pure electric vehicles – will sit in the lowest first-year VED band, which currently carries a £0 charge.
WLTP will also ensure that the advertised single-charge range – or how many miles an EV will go before the battery is fully drained – is representative of what is achievable under normal day-to-day circumstances.
How can I avoid the cost of rising car tax?
By purchasing your next vehicle before the start of April, it’ll mean your vehicle’s first-year VED classification will use the outgoing NEDC figures, rather than the incoming WLTP ones. That could potentially save you hundreds of pounds on first-year road tax.
We’ve run through three examples to show you how prices will change when the WLTP figures come into effect.
Volkswagen Passat Saloon R-Line 2.0 TDI DSG
List Price: £35,280
NEDC [before April 1st] CO2 emissions: 116g/km
WLTP [after April 1st] CO2 emissions: 146g/km
This diesel-powered Passat will move up one VED band after the WLTP figures come into effect on April 1st, meaning the first-year VED charge applicable will rise from £170 to £210.
Land Rover Discovery Sd6
List Price: £57,360
NEDC CO2 emissions: 202g/km
WLTP CO2 emissions: 262g/km
This Land Rover Discovery, powered by a six-cylinder diesel engine, will be one of the models to receive the biggest rise in first-year VED. Currently in the 191-225 band, which carries a first-year VED charge of £1280, this particular Discovery model will move into the highest band, with a first-year charge of £2135. That’s a rise of £855 from April 1st 2020.
Jaguar I-PACE EV400
List Price: £64,495
NEDC CO2 emissions: 0g/km
WLTP CO2 emissions: 0g/km
Despite having the highest list price of the vehicles shown in these examples, the Jaguar I-PACE is fully electric, meaning it currently falls into the lowest first-year VED band, which does not carry a charge. That won’t change after April 1st either, as it will still emit 0g/km under the WLTP tests. Remember, though, due to its original purchase list price being higher than £40,000, there will be a £320 premium payable from the second year of owning this vehicle, regardless of the fact it qualifies for the lowest VED band.
Start looking for your next new car by browsing our brand new in-stock vehicles now, or visit us at one of our dealerships across the North of England.
