Rachel Reeves has set out vehicle tax changes that affect owners of older cars, with annual payments varying from £20 to as much as £790. Motorists can face wildly contrasting tax bills based on the type of car they own, so it is worth checking the tax rate before making a purchase to avoid a bill worth hundreds of pounds.
New Rules for Pre-2017 Cars
Most newer cars are subject to a blanket £200 annual payment, but that can change for motors made before 2017. Charges are then based on emissions levels. Drivers can be hit with bills which are either lower or much higher than the standard £200, surging as high as £790 for the worst-affected models.
Cars registered before 2017 are placed in a tax band, ranging from A to M, based on how polluting they are. Band A is as low as £20, yet gas guzzlers in Band M are subject to a £790 annual payment. So your choice of car matters. Many cars tend to be in mid-range bands from E to H. Band E fees are the same as newer models at £200, F is £225, G £275, while Band H motors come with a £325 tax payment.
Cleaner Vehicles Lose Free Road Tax
New rules also mean cleaner vehicles emitting under 100 g/km of CO2 no longer get a free road tax perk. They now have to pay £20 a year. Andy Wood, tax expert at Tax Barrister UK, said: “A lot of drivers still assume road tax is calculated purely on the age of the vehicle, but emissions remain one of the biggest factors in determining how much motorists pay. Even relatively modest differences in CO2 output can place vehicles into entirely different tax bands, which can have a noticeable impact on annual running costs.”
Andy added: “The removal of the zero-rate band for cars emitting under 100g/km has caught some drivers off guard because many had become used to paying nothing at all. While £20 may not sound substantial on its own, it reflects a wider shift towards bringing more vehicles into the VED system regardless of emissions performance.”
