Car tax bands explained
It seems like the UK government change the rules on car tax bands every year. The rules changed again on April 1 2018, and there has been another increase in April 2019, so here’s our guide on what you have to pay.
Cars with 0g/km of CO2 emissions have to pay nothing in the first year, compared with cars emitting more than 255g/km, which will now have to pay £2,135 in the first year.
However, the first year's road tax is covered in the car's 'on-the-road' price, so it's absorbed into the overall cost of the car, rather than you having to shell out up to £2,135 on top of everything else.
1. For petrol or diesel vehicles, you pay £145 a year.
2. For alternative fuel vehicles (hybrids, bioethanol, liquid petroleum gas), it’s £135 a year.
3. Fully electric cars pay £0.
On top of that, if the car has a manufacturer’s list price of over £40,000, you’ll have to pay a new additional rate of £320 on top of the standard rate for five years. After this, the vehicle will be taxed only at the standard rate for that type of vehicle.
It also says the supplement on cars of more than £40,000 will ensure those who can afford the most expensive cars make a fair contribution.
Related: Complete guide to company car tax for employers.
Before 2017, the Volvo XC90 T8 (a plug-in hybrid with emissions of less than 50g/km) paid no VED. Under the new system, the £10 first-year rate will be followed by annual bills of £465 (the flat rate of £145, plus the £320 supplement for cars with a list price of more than £40,000) for five years.
Cheaper low-emission cars have jumped in cost too. Any car with CO2 emissions of less than 100g/km paid no VED before April 2017, but under the new system, a car with emissions between 91 and 100g/km will pay £130 in its first year, followed by £145 each year after that.