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New VED System: What you need to know

Driving expensive cars is about to get even more expensive with a whopping £450 road tax charge targeting high end motors
New VED system: What you need to know - Driving expensive cars just got more expensive

With George Osborne’s 2015 budget hot on the anvil, it does seem like a good time to take a look at the new VED system motorists will now have to comply with and shell out for. While we know tax can no longer be passed on when a vehicle is sold, the topic of conversation here is new cars. Many drivers in the UK have been watching their carbon footprint and taking advantage of the reduced rates of road tax in their low emission vehicles. These motorists will now be the last to enjoy the emission incentive as the VED overhaul is set to bring carbon friendly vehicles into arms reach of the tax man.


Currently, the amount of road tax you need to pay is relative to the amount CO2 your vehicle emits per kilometre and there are 13 different bands your vehicle could fall into. Under the new VED system, there will be only 3 bands for all vehicles registered after April 2017.

Drivers will be required to pay the “first year rate” for a year and then a standard £140 every year after. The first year rate is defined by your vehicles emissions ( see the table to the right ) and varies from £10 to £2,000.

0 emission vehicles will remain VED free but the new system will bring low emission petrol vehicles which are currently exempt or on a reduced VED rate into the “Standard” band, meaning 95% of all drivers on the road will be required to pay a minimum of £140 per year.

The move comes as car manufacturers have stepped up their eco-friendly game leaving nearly three quarters of all future UK cars exempt from VED. In fact there are currently 445 models of vehicle that are exempt from VED, but after 2017, only 13 will remain so.

While this covers the majority of drivers on the road, another decision to add a £310 surcharge to vehicles that are over £40,000 in value will further expand the net and make for much higher takings. While the decision is controversial, George Osborne has assured MP’s and the public that every penny raised by VED would go back into our roads.

Will this effect you?

Are you planning on buying a brand new car after April 2017? If not, you will not be affected at all – don’t worry! If you are planning on doing just that then beware! The only thing left to be seen is what the funds collected from 2017 – 2020 will be used for…

Thanks for reading. Make sure to stay tuned to the Warrantywise blog, Facebook and Twitter for more great content throughout 2015!

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