You don’t need to display a tax disc anymore (remember those? – pictured above) but we still need to pay our road tax.
Large increases in Road Fund Licence which take effect on the 1st April 2020 mean that you could save a lot of money by buying your new car with a registration date no later than the 31st March 2020.
The new WLTP emissions programme means that most cars have had their CO2 bands changed and the majority of cars will now attract higher road tax (RFL or VED) as a result. Essentially the dearer the car (unless it is fully electric or hybrid) the more road tax you will pay in the first year on your new car if it is registered after the 31st March 2020.
What are these VED / Road Tax increases that I need to beat?
If you’re a driver in the UK, you’ll know that you have to pay for something called Vehicle Excise Duty or a Road Fund Licence (commonly called car tax or road tax). The amount you pay will depend on factors such as engine size, fuel type and the amount of CO2 emissions your vehicle generates at the time it is first registered.
You can now understand why diesel car owners usually have to pay a higher rate of VED than petrol users, and why electric vehicle owners are exempt from paying car road tax entirely. In simple terms, the lower your CO2 emissions are, the lower the rate of your vehicle excise duty.
Previously, this was measured through the New European Driving Cycle test (NEDC) which was first developed in the 90s and last updated in 1997. However, with the rise in advanced technology in the last decade, NEDC testing has become outdated and is no longer truly representative of real-life driving.
Instead, a new method of testing called Worldwide Harmonised Light Vehicles Test Procedure (WLTP) replaces it. The upcoming WLTP method is able to determine a more realistic evaluation of your vehicle’s official fuel consumption (mpg), driving range and CO2 emissions (g/km).
As a result, your vehicle’s CO2 emission output will change, probably placing it in a higher tax band to its current rate, causing an increase in the cost of your road fund licence for the first year.
When is VED / Road Tax set to increase?
The change is set to be introduced on 1st April 2020 for Vehicle Excise Duty and 6th April 2020 for Benefit-in-Kind on Company Car Tax. Remember, the change will only affect your very first Vehicle Excise Duty payment when you buy and register a new vehicle after these dates.
Why is VED / Road Tax increasing?
The new WLTP method reflects better real driving conditions to provide a more accurate representation of your vehicle’s emissions and fuel economy. Unfortunately, the NEDC method of testing has now become outdated and does not provide an accurate interpretation of your vehicle.
What Tax Band is my car in?
You will now be wondering what this all means for you. We have a comprehensive table that gives you the information you need to know what your first year’s road tax will be for cars registered from the 1st April 2020 onwards – email firstname.lastname@example.org and we will send it to you asap
How can I “Beat the Tax increase”?
Buying your new car before the April 2020 road tax increases could save you a fair bit of money on the first year of Vehicle Excise Duty.
One example is the Mazda CX-5 SUV which encounters the biggest VED increase of the Mazda range.
- Model: Mazda CX-5 2.2-litre 184PS AWD GT Sport Auto Diesel
- Current VED tax band (and rate) H (£530)
- VED tax band (and rate) from 1st April 2020 J (£1,280)
- Difference of VED £750
More examples of VED increases from the Jaguar range are shown below;
- Jaguar XE up to £750
- Jaguar XF up to £425
- Jaguar XF Sportbrake up to £750
- Jaguar E-PACE up to £960
- Jaguar F-PACE up to £960
- Jaguar F-TYPE up to £425
The new WLTP testing procedure has been designed to better reflect real driving conditions, to give a more accurate view of a vehicle’s emissions and fuel economy. This change takes effect from 1st April for VED (Vehicle Excise Duty or Road Tax) and 6th April for Benefit in Kind on Company Car Tax which we will cover in a separate post. Because the WLTP test is more stringent, the results are more realistic, and this could mean an increase in road tax for your new car.
If you would like more information on how these changes will affect you, please don’t hesitate to contact us.