Car Tax Rate Changes in 2019

With Brexit looming, 2019 is for sure going to be an eventful and historical year, both for the citizens and economy of the United Kingdom. Apart from the Brexit, one of the major changes 2019 is going to bring is changes in the Vehicle Excise Duty (VED) also known as vehicle tax or car tax or road tax. First introduced in the year 1888, Vehicle Excise Duty or car tax is collected and enforced by the Driver and Vehicle Licensing Agency (DVLA) and is an annual tax that is levied as an excise duty which must be paid for most types of vehicles and in order to save yourself from paying late fee, it is advisable to keep a check on when your car tax is due for. Normally DVLA is vigilant enough and sends a reminder when your vehicle tax is due for its renewal, however you can also check the due date on its official website to see if your car is taxed by entering your vehicle’s registration number.

Car Tax Rate Changes in Annual Budget 2018/19

As far as car tax is concerned, it is confusing and depends on its registration date i.e. depending on the date your car was first registered, you will be subject to one of the three current different car tax systems. Also, in the Annual Budget 2018/19, it was declared that with effect from 1st April 2019, there will be change in car tax rate for cars, vans and motorcycles and it will increase in line with RPI i.e. Retail Price Index.

Also Read: Allowance Rates on Car Tax Mileage

• If your vehicle is registered in UK and is used on public roads, then it has to be taxed.
• If you are not using your car then you must inform the Driver and Vehicle Licensing Agency (DVLA) regarding the same along with a SORN (Statutory Off Road Notification), else you have to pay car tax on it.
• The official CO2 emissions or CO2 figure is mentioned on the V5c registration document and is measured before new models are put on sale.
• Prior to 1st April 2017, car tax was directly related to how old your car is and official CO2 emissions i.e. size of its engine. Rules changes post 1st April 2017 and the main points post 1st April 2017 were:
  • For the first year, car tax will be based on the official CO2 figures.
  • For the following years, a flat standard rate was applicable on all cars except those with 0 CO2 emissions.
  • If the cost of your car is above £40,000, then you are liable to pay £310 per year for first 5 standard rate years.
  • If your new car is not meeting the latest Real Driving Emissions standards, then the first year rate is one band higher than indicated by official CO2 figures.

Car tax rule changes frequently in the United Kingdom and considering that car tax or road tax generates around £5 billion per year, any small change here and there can yield significant losses or gains for the government and going by its pattern for previous three years, car tax or Vehicle Excise Duty is going to increase for the third consecutive year in April 2019 and motorists i.e. car owners, van owners and motorcycles owner will feel a slight pinch in their pocket because as per 2018 Budget, motorists have to pay more car tax which is in line with the inflation.

Also Read: Tax for Second Hand Car

1. For cars having official CO2 emission figure less than 76g/km, there will be no change in the car tax and owners will have to pay the same old tax.
2. For cars having official CO2 emission figure between 76g/km and 150g/km, car tax will increase by £5.
3. For cars having official CO2 emission figure between 151g/km and 170g/km, car tax will increase by £15.
4. For cars having official CO2 emission figure between 171g/km and 190g/km, car tax will increase by £25.
5. For cars having official CO2 emission figure between 191g/km and 225g/km, car tax will increase by £40.
6. For cars having official CO2 emission figure between 226g/km and 255g/km, car tax will increase by £55.
7. For cars having official CO2 emission over and above 255g/km, car tax will increase by £65.

What rate of car tax you pay is not based on the date when you have bought your car but is rather based on the date when it was first registered, however this is not the case for the second hand cars. The first registration date of a car does not alter with subsequent owners. For example: If you bought a brand new car and got it registered on 1st Feb 2017, and then sold it to someone else on 23rd July 2018, then the first registration date of the car will remain as 1st Feb 2017.

New Car Tax Rate in 2018/19

The new car tax rate will affect cars first registered on or after 1st April 2017 as mentioned below:

New car tax rates are not backdated i.e. they are not applicable to the cars that have already been registered and is paying annual car tax. Also the changes in tax don’t apply to vans or pick-up trucks because these qualify for light commercial vehicle (LCV) road tax and currently set at a flat rate of £240, is independent of car tax.

• For cars which are registered after 1^st April 2017 i.e. if your number plate is 17, 67, 18 or 68 - then the standard car tax rate for your petrol or diesel car will increase to £145 whereas for a hybrid car owner, the car tax rate will go up to £135.
• For cars which were registered between 1^st March 2001 and 31st March 2017 i.e. if your number plate is Y,51, 02, 52, 03, 53, 04, 54, 05, 55, 06, 56, 07, 57, 08, 58, 09, 59, 10, 60, 11, 61, 12, 62, 13, 63, 14, 64, 15, 65, 16, 66, 17 – the revised car tax rate doesn’t just hit the owners of new and relatively new cars but has also affected those who have registered their cars between 1st March 2001 and 31st March 2017 and where most of the bands will see a nominal increase, those having low carbon outputs and electric models will not be much affected.
• For cars registered before 1^st March 2001 i.e. if your number plate is X-reg or pre-dates X-reg: There is no concrete information on how the owners of cars that were registered before 1st March 2001 however they are also likely to get affected by the increase in the car tax rate and have to pay more like other car owners, depending on size of the engine of your car i.e. if the size of your engine is bigger than 1.55 litres, then car tax will increase by £10 to 265 per year and if you have a car with small engine, then your annual car tax rate might go up by £5 per year. However, if your car is more than 40 years old, then you are exempted from VED.

Understand new rule of car tax 2019

In order to understand how the new rule of car tax 2019 is going to affect you, below is a list of table with CO2 levels of certain cars in ascending order. All cars listed below have green engines and are under £40,000.

Which implies that as per the new car tax rules, you will end up paying £2,425 less if your car is environmentally friendly, however you still end up paying amount £1,185 on certain green cars such as Toyota Prius over a 10-year period.

As mentioned above, everyone whose car is registered in UK and is on road is liable to pay car tax, however there are certain vehicles which are exempted from vehicle tax such as:

• If the vehicle is used by a disabled person.
• Mowing vehicles.
• Electric vehicles.
• Steam vehicles.
• Vehicles used just for agriculture, horticulture and forestry.
• Historic vehicles built more than 40 years before 1st January of the current year.
• Mobility scooters, powered wheelchairs and invalid carriages.
• Disabled passenger vehicles.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.