2. VED reform
2
Vehicle tax (VED)
is changing...
Our previous briefings focused mainly on the effect
the new VED scheme will have on the first registration
process for all M1, M1SP and M1G vehicles registered
on or after 1 April 2017; this brief focuses more closely
on licensing.
Vehicles registered before 1 April 2017 will continue
to be taxed in the same way. Only vehicles
registered on or after that date will be subject
to the new tax scheme.
Future changes to the licensing service
Changes to the current licensing system to support
the new taxation rates are being developed and we
are looking to test these during the autumn, ready
for mid-March advanced registrations.
Next steps...
We will continue to work with you to prepare for the
changes, focusing on how we can help you deliver
the message about the changes to the general public
because you are the first point of contact with the
customer. We will also continue to provide feedback
on progress.
Anyone who wishes to be added to our industry
distribution list to receive further communications,
ask any questions about the changes and give us
feedback should contact
ved.reform@dvla.gsi.gov.uk
Please share this with your colleagues.
3. VED reform
3
List price
M1 (M1SP and M1G) vehicles registered on or after
the 1 April 2017 with a list price over £40,000 at first
registration, will pay an additional rate of £310 for five
years from the start of the second licence. This is in
addition to the standard rate.
All other vehicles, including M1 vehicles without a CO2
figure on the final type approval will be unaffected by
these changes as will all vehicles registered before
1 April 2017.
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CO2 Current rates
Rates for vehicles registered
after 1 April 2017
From To Band
Petrol/Diesel cars
(Tax class 48 & 49)
Alternative fuel car
(Tax Class 59)
Band
Petrol/Diesel cars
(Tax class 48 & 49)
Alternative fuel car
(Tax Class 59)
Difference
0 0 A £0 £0 A £0 £0 £0
1 50 A £0 £0 B £10 £0 +£10
51 75 A £0 £0 C £25 £15 +£25
76 90 A £0 £0 D £100 £90 +£100
91 100 A £0 £0 E £120 £110 +£120
101 110 B £0 £0 F £140 £130 +£140
111 120 C £0 £0 G £160 £150 +£160
121 130 D £0 £0 G £160 £150 +£160
131 140 E £135 £125 H £200 £190 +£65
141 150 F £150 £140 H £200 £190 +£50
151 165 G £185 £175 I £500 £490 +£315
166 170 H £300 £290 I £500 £490 +£200
171 175 H £300 £290 J £800 £790 +£500
176 185 I £355 £345 J £800 £790 +£445
186 190 J £495 £485 J £800 £790 +£305
191 200 J £495 £485 K £1,200 £1,190 +£705
201 225 K £650 £640 K £1,200 £1,190 +£550
226 255 L £880 £870 L £1,700 £1,690 +£820
256 M £1,115 £1,105 M £2,000 £1,190 +£885
First licence rates
First licence rates for vehicles will continue to be based on CO2 emissions.
02
Direct Debit payments will not to be available for first year licences.
4. VED reform
4
Refund of first year licences
Refunds of first year licences will continue to be
processed in the same way as they always have been.
List price £40,000 or under – Cars with CO2 emissions
of 100g/km or below, refund will be based on the first
year licence actually paid. Cars with CO2 emissions
above 101g/km would have a refund based on the
£140 rate.
List price exceeding £40,000 – Cars with CO2
emissions of 150g/km or below, refund will be based
on the first year licence actually paid. Cars with CO2
emissions above 151g/km would have a refund based
on the £450 rate.
03
Standard rate licences
From the second licence a vehicle will be charged
at either a standard rate or a standard rate plus an
additional rate. Vehicles priced at £40,000 and under
when first registered will pay the standard rate. Vehicles
priced at over £40,000 will be charged at the standard
rate, plus the additional rate for 5 years, they will then
only pay the standard rate.
The standard rate for vehicles with zero emissions
will be £0. The standard rate for alternative fuel vehicles
will be £130. The standard rate for all other vehicles
will be £140.
The additional rate for all vehicles over £40,000 will
be £310, so the total per year will be £310 for zero
emission vehicles over £40,000, £440 for alternative
fuel vehicles over £40,000 and £450 for all other
vehicles over £40,000.
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5. VED reform
5
Tax class Non Direct Debit Direct Debit
12 months 6 months Single 12
month
payment
Total
payable by
12 monthly
instalments
Single 6
month
payment
Petrol/Diesel car (£40,000 or less) £140 £77 £140 £147 £73.50
Alternative fuel car (£40,000 or less) £130 £71.50 £130 £136.50 £68.25
Petrol/Diesel car (over £40,000) £450 £247.50 £450 £472.50 £236.25
Alternative Fuel car (over £40,000) £440 £242 £440 £462 £231
Electric car (Tax class 79) (over £40,000) £310 £170.50 £310 £325.50 £162.75
Cost of tax (12 and 6 month and Direct Debit options)
Emissions/Fuel List price Standard
rate
Additional rate
for 5 years*
Total per
year
Zero emissions/Electric £40K or less £0 £0
Zero emissions/Electric Over £40K £0 £310 £310
>zero emissions/Alternative fuel £40K or less £130 £130
>zero emissions/Alternative fuel Over £40K £130 £310 £440
>zero emissions Petrol/Diesel £40K or less £140 £140
>zero emissions Petrol/Diesel Over £40K £140 £310 £450
*After the 5 year period the vehicle will be taxed at the standard rate for that vehicle
The usual 50% and 100% discounts will apply to the total price for those
eligible under Personal Independence Payment (PiP).
Electric vehicles tax class
Vehicles registered in the Electric tax class will
continue to pay a nil rate of tax unless the original list
price of the vehicle exceeds £40,000 then additional
rate will be applicable for 5 years from the start of the
second licence.
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6. VED reform
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How a customer will know if the
additional rate of tax applies
The V5C is being amended to indicate where a vehicle
is subject to the additional rate of tax. We plan to
include this as part of the special notes section which
is found on the front of the document.
We also plan to reflect this on the V5C/2 new keeper’s
supplement. We are currently carrying out customer
insight testing around the wording.
The DVLA’s Vehicle enquiry service (VES), will also show
whether the additional rate of tax applies to a vehicle
and when it will end, www.gov.uk/check-vehicle-tax
07
Tax reminders
Tax reminders will continue to show the full 12 and 6
month rates (where applicable) inclusive of additional
rate where it applies. We will not be making reference
to additional rate separately and this applies to the
electronic relicensing also.
08
Hybrid/alternative fuel vehicles
Hybrid and alternative fuel vehicles registered after
1 April 2017 will receive a £10 reduction on the cost
of their tax as is the current practice. The standard rate
will therefore be £130 with the additional rate costing
£310. First licence rates will also have the reduction
meaning vehicles with CO2 of up to 50g/km will pay
nothing for the first licence.
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