A Fleet Manager’s guide to vehicle tax bands: cars
Understanding VED bands can be quite challenging. In order to keep on top of things when taxing your fleet vehicles, here’s what you should be considering:
It’s true — vehicle tax bands are far from straightforward. How much you pay across your fleet will depend on a variety of factors including the type of vehicle, the size of its engine, and even the fuel it uses. These elements – and more – are essential when it comes to calculating Vehicle Excise Duty (VED).
So how much VED will you be paying on your fleet vehicles? Below we talk about car costs, but we also investigated van costs.
Cars registered between 1st March, 2001-31st March, 2017
For cars registered between 1st March, 2001 to 31st March, 2017, the tax band and annual charge it’s allocated depends solely on its CO2 emissions.
There are 13 different rates, all of which can be paid via a single direct debit payment that covers a 12-month term. These are covered in the table below:
* Bands L and M only apply to cars registered after 22nd March, 2006. All cars with CO2 emissions of 225g/km and above, that were registered before that date, pay the band K charge.
As you can see from the table above, cars that are not solely powered by petrol or diesel, or ‘alternative fuel’ vehicles, receive a £10 discount in their given band. However, vehicles of all fuel types that produce less than 101 g/km of CO2 (Band A) are exempt from paying VED altogether.
Cars registered from 1st April, 2017 onwards
Cars registered from 1st April, 2017 onwards are taxed under a new VED regime. The first year rate (FYR) retains a link to the vehicle’s CO2 emissions, while a flat standard rate (SR) of £140 applies in all subsequent years (except for zero-emission cars). But it’s a little more complex than that, and there are a few caveats along the way.
In the first year…
As referenced below in table 3, first year payments work out cheaper on average for diesel and petrol cars in tax bands A to H when compared to the previous system in table 2. However, they see a significant increase in bands I to M.
As they did under the previous system, alternative fuel vehicles receive a £10 discount within their given band. At the same time, diesel cars that don’t meet new, stringent test requirements now pay the next band of VED rates – so a band C diesel that doesn’t meet the requirements will pay the same as a Band D vehicle that does meet these regulations.
Whereas all vehicles emitting less than 101g/km were exempt from VED previously, now only alternative vehicles that produce less than 76g/km are exempt.
The annual VED rates in the first year are as follows:
Each year thereafter…
After the first year, all cars are assigned a flat, standard rate. This is £140 for petrol and diesel cars, or £130 for alternative fuel cars, while zero emission cars are exempt.
But it isn’t quite that simple. There’s now an extra £310 charge for cars sold with a list price over £40,000, owed in each of the first five ‘standard rate years’.
For petrol and diesel cars, the additional £310 takes their tax rate to a combined £450, while it’s £440 for alternatively-fuelled vehicles. Though they may be exempt from paying any tax based on their CO2 figures, the £310 list price charge does still apply for zero emissions vehicles. That means these would pay nothing in the first year, £310 per year for five years, then nothing thereafter.
Put handily in a table, that’s:
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