Driving Green: How much is VED (road tax) for "green" cars?

For several years any car rated below 100g/km of CO2 has attracted a zero rate of vehicle excise duty (VED), or road tax. At first even some hybrids didn’t fall within this threshold, and it took a while for even the smallest conventionally powered cars to become eligible, so the Government was happy.

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But with some large diesel-engined cars now getting close to (or even undercutting) that magic 100g/km figure, and a whole slew of conventionally powered small cars comprehensively beating it, the goal posts have had to be moved. It’s reckoned that by 2025, around three-quarters of new cars sold in the UK will emit less than 100g/km of CO2.

Fuel and road tax income has dropped sharply thanks to massively improved efficiency in recent years, so the Government had no choice but to have a rethink. The average CO2 emissions for a new car sold in the UK is now just 124.6g/km and by 2020 this has to drop to just 95g/km.

So it’s no wonder that the Chancellor has had to act – and that’s just what he’s done. From April 1 2017 a new CO2-based road tax system will come into force. It won’t affect cars registered before this date, which will adhere to the current system. Under the new rules, electric cars will still attract no road tax, but if the list price is over £40,000 you’ll have to pay a £310 fee.

All cars that cost over £40,000 will have that annual £310 fee to pay, on top of a £140 charge that’s payable every 12 months from the second anniversary of the car being registered. On top of that, another fee is payable when a car is registered, whatever its list price.

The size of this fee is dependent on the car’s CO2 emissions, but it seems that the party is over for low-CO2 cars because even those that emit just 91-100g/km will attract a first-year fee of £120 while you’ll be stung for £160 if your car emits 111-130g/km. So essentially, if you buy a car registered after April 1 2017, unless it’s electric you’ll get stung for rather more road tax than you do now.

Driving Green contents

Homepage

Introduction to green driving

1. What is a “green” car?
2. What does Euro 6 mean when it comes to emissions?
3. Why have green cars been developed?
4. Nine tips for eco-driving

Choosing a green car

1. What are hybrid cars?
2. What are plug-in hybrid (PHEV) cars?
3. What are extended-range electric vehicles (E-REVs)?
4. What are hydrogen fuel cell vehicles?
5. Are pure-electric cars suitable?
6. Whatever happened to LPG (liquid petroleum gas)?
7. What are biofuels?

Green car buying guides

1. Driving’s top five electric cars
2. Driving’s top five hybrids and E-REVs

Financial, environmental and practical implications of green motoring

1. Electric car UK public charging point maps
2. The truth about real-world mpg and fuel costs
3. How much is VED (road tax) for green cars?
4. Are electric cars expensive to insure?

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