A new system of vehicle excise duty will lead to a simpler, more streamlined system – but many low-emission cars will no longer be exempt from the tax.
Changes to the vehicle excise duty (VED) system announced earlier this month by Chancellor George Osborne mean that many makes of car will pay more road tax in future.
The reforms, which are due to come into effect in April 2017, are in response to falling revenues.
Lower tax take
At present, VED is low or zero for a large number of low-emission vehicles including many petrol or diesel-only cars.
But as new model have become increasingly environmentally friendly, Treasury VED takings have been dwindling, with fewer and fewer motorists paying the tax.
The changes will only apply, however, to cars bought as brand new and registered after the reforms come into effect.
Your current rate of VED will apply to your existing car until you sell it and buy another model.
How the system works now
At the moment, all cars in bands A (carbon dioxide emissions of up to 100g/km) to D (up to 130g/km) pay no VED in the first year.
After that, band A cars continue to be tax-free while band B vehicles pay £20 a year, band C pay £30 and band D £110.
Models with higher emissions pay between £130 and £505 a year, although some face an even higher one-off first-year charge of as much as £1,100.
This is designed to deter the purchase of the most-polluting cars.
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Topic: How new road tax rules could affect you (Read 1270 times)