The latest VED rates for 2013/2014 can be found here.
If you’re a fan of fast cars then you’ll probably have listened with a mixture of horror and confusion as the Chancellor, Alistair Darling, announced a shakeup of the current Vehicle Excise Duty (VED) tax bands.
For 2008-09 the structure of the VED bands remains the same, but with increased prices (they were hardly going to go down) while from 2009 onwards there is a much more significant change.
So, for cars registered on or after 1st March 2001 (‘Y’ plate onwards) the tax bands currently look like this:
| Band | CO2 (g/km) | VED Rate 2008/09 |
|---|---|---|
| A | Up to 100 | £0 |
| B | 101-120 | £35 |
| C | 121-150 | £120 |
| D | 151-165 | £145 |
| E | 166-185 | £170 |
| F | Over 186 | £210 |
| G* | Over 225 | £400 |
From April 1st 2009 the tax rates will be worked out as follows:
| Band | CO2 (g/km) | VED Rate 2009/10 | 2010/11 Standard Rate | 2010/11 New Cars |
|---|---|---|---|---|
| A | Up to 100 | £0 | £0 | £0 |
| B | 101-110 | £20 | £20 | £0 |
| C | 111-120 | £30 | £35 | £0 |
| D | 121-130 | £90 | £95 | £0 |
| E | 131-140 | £110 | £115 | £115 |
| F | 141-150 | £120 | £125 | £125 |
| G | 151-160 | £150 | £155 | £155 |
| H | 161-170 | £175 | £180 | £250 |
| I | 171-180 | £205 | £210 | £300 |
| J | 181-200 | £260 | £270 | £425 |
| K | 201-225 | £300 | £310 | £550 |
| L | 226-255 | £415 | £430 | £750 |
| M | Over 255 | £440 | £455 | £950 |
Where there were seven bands based on the C02 output of your car there are now thirteen, each with a narrower range of CO2 values. The lowest polluters in new bands A-C now pay no or very little car tax. From there the cost of the car tax takes a jump into band D, growing steadily to band I. Then you get the big polluters from band J onwards, and that’s where your wallet really starts to get punished.
There’s both a carrot and a stick for buyers of new cars from 2010. Cars that fall into band D or less pay nothing for their first year’s car tax, after which it reverts to the standard rate. New cars in bands E to G are charged the equivalent of the standard rate in year one, but cars in bands H and above have to pay an extra ‘environmental’ charge on top of the standard rate (but only for the first year). Fortunately this only applies to new cars, so second-hand buyers don’t need to worry.
This change has led to a great deal of misinformation and confusion, as various media headlines were announcing how modest family cars would suddenly be paying over double in car tax. Consider the Honda CR-V 2.0-litre, a popular family car, which if you believed the headlines would be going up from £210 per year now to £425 per year in 2010. What the headlines weren’t doing was explaining the full story.
Looking carefully at the figures for the CR-V, the 2.0-litre engine kicks out 197g/km placing it in band I. So, the current rate for a vehicle registered in 2008 would be £210, rising to £260 in 2009 and £270 in 2010. Now, if you were to buy that car new in 2010 you would be hit by the first year penalty and would pay £425 for the first year. This is where the headlines were misleading, as what they didn’t shout so loudly about is that the rate drops the next year to £270. It’s still a lot more money, but not quite the end of the world for families as portrayed in the media.
Example 2, an Audi TT V6 rated at 247g/km bought new in 2008 would pay £400 for car tax in it’s first year, £415 in 2009 and then £430 in 2010. However, if that same car was bought new in 2010 the first year of car tax would cost £750, dropping to £430 in the following year.
Finally, take an example from the other end of the spectrum. The Toyota Yaris 1.0 is rated at 127g/km and bought new in 2008 would cost £120 in year one, dropping to £90 in 2009 and then £95 in 2010. Bought new in 2010, the same car would cost nothing to tax in it’s first year and then £95 the year after.
* For 2008-09 band G only applies to cars registered on or after March 23rd 2006. If a car is over 225 g/km but was registered between 1st March 2001 and March 22nd 2006 it falls into band F, saving the lucky owner £190.
For cars registered before 1st March 2001, the banding is much simpler, but not much cheaper for most cars:
| Engine Size (CC) | VED Rate 2008/09 | VED Rate 2009/10 |
|---|---|---|
| Up to 1549 | £120 | £120 |
| Over 1549 | £185 | £200 |
So, a humble Ford Focus 1.6 on an X-plate will cost exactly the same to tax as a Lamborghini Diablo of the same age. Fair? Probably not, but good news for owners of older high-performance cars.
If you want to know where your car fits into the C02 bands or you’re trying to identify alternative cars in a lower band you should check out Carpages , who have a very useful list of cars broken down by C02 emissions and vehicle size.
What’s obvious is that there are winners and losers. The winners are those people with small cars, particulalrly small diesels, while the losers are basically anyone with large family cars or anything you might describe as fast and entertaining. But there are always methods of reducing the blow to your finances – so let’s stick it to the Taxman!
