One way of beating the tax increase is by knowing exactly what it is and why it's happening in the first place. Here's everything you need to know about the road tax (VED) changes set to take course on 1st April 2020.
If you're a driver in the UK, you'll know that you have to pay for something called Vehicle Excise Duty or a road fund licence (commonly called car tax or road tax). The amount you pay will depend on factors such as engine size, fuel type and the amount of CO2 emissions your vehicle generates at the time it is first registered.
You can now understand why diesel car owners usually have to pay a higher rate of VED than petrol users, and why electric vehicle owners are exempt from paying car road tax entirely. In simple terms, the lower your CO2 emissions are, the lower the rate of your vehicle excise duty.
Previously, this was measured through the New European Driving Cycle test (NEDC) which was first developed in the 90s and last updated in 1997. However, with the rise in advanced technology in the last decade, NEDC testing has become outdated and is no longer truly representative of real-life driving.
Instead, a new method of testing called Worldwide Harmonised Light Vehicles Test Procedure (WLTP) replaces it. The upcoming WLTP method is able to determine a more realistic evaluation of your vehicle's official fuel consumption (mpg), driving range and CO2 emissions (g/km).
As a result, your vehicle's CO2 emission output will change, placing it in a higher tax band to its current rate, causing an increase in the cost of your road fund licence for the first year.
The change is set to be introduced on 1st April 2020 for Vehicle Excise Duty and 6th April 2020 for Benefit-in-Kind on Company Car Tax. Remember, the change will only affect your very first Vehicle Excise Duty payment when you buy and register a new vehicle after these dates.
The new WLTP method reflects better real driving conditions to provide a more accurate representation of your vehicle's emissions and fuel economy. Unfortunately, the NEDC method of testing has now become outdated and does not provide an accurate interpretation of your vehicle. Using the table below, you will be able to calculate which tax band your vehicle would be in if you were to buy it after 1st April 2020:
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