In the Autumn Budget, a range of changes to vehicle excise duty (VED) were announced that impact many motorists. But a new survey by shows that 90% of us don’t really know how these measures will affect us when the changes happen. And with rises to cost of an annual VED being potentially as much as £500 for some larger new diesel vehicles, some motorists could be in for a nasty surprise in the coming months when they renew their road tax for the new year.

New vehicle excise duty rules

The most important changes announced in the last budget was around vehicle excise duty and the new rules mean that they will increase for owners of new diesel cars from April 1st. The change could see some vehicles paying more than £500 in tax in the first year of ownership.

A recent survey showed that 87% of drivers were unclear about the changes or were unaware that the new diesel duty system was coming in. The new rules not only apply to diesel cars bought from April onwards but will mean all 17-plate diesel vehicles will be one tax band higher. The aim of ministers is to put people off buying new diesel vehicles as much as possible.

Diesel increases

Many diesel vehicles will be around £20 a year more expensive, but the bigger models will see a significant hike in cost for the first year on the road. Even the most efficient diesel model, the Peugeot 208 1.6-litre BlueHDI Active 75 which produces as little as 78g/km will be affected. This is despite it being the cleanest non-hybrid or electric vehicle on the market.

Some of the premium diesel vehicles such as the Mercedes Benz GLE 350d AMG 4Matic and the Range Rover 4.4 SDV8 could see their first year’s car tax rise from around £1,500 to around £2,000 when the new rules come in.

It is not just the big luxury vehicles that are being hit. Affordable family cars such as the Hyundai i800 PMV and the SsangYong Rexton SUV will also fall into the increased bracket with car tax costs rising by £500 a year.

Find the current vehicle tax rates table here

April 2017 changes

Apart from penalising diesel drivers, the aim of the new VED rules was to simplify the system and make it easier to see how much you would be paying. It followed the increase in VED for the first year, introduced in April 2017.

The new system is as follows for existing car owners:
• £140 a year for petrol or diesel vehicles
• £130 a year for alternative fuel vehicles such as hybrids or LPG
• £0 a year for zero CO2 emissions
This means that electric cars worth less than £40,000 will have no car tax. All vehicles worth £40,000 or more will have an added surcharge of £310 on top of the standard rate for five years. After this period the charge will drop back to standard rates.

The government also said that from 2020, a third change to car tax will take place with the bands being adjusted to match the latest fuel economy tests. This measures emissions outputs from the new style tests that have been implemented since September last year.

Survey results

According to the survey from not only do 90% of drivers they spoke to not understand the new changes, but some also had no idea that the first year’s tax would cost more than other years. For those who were aware, it does seem to have had an impact on their buying choices.

Three in five said they wouldn’t be buying a new diesel for their next vehicle and around one third said this was directly due to the increase in tax. 46% of the survey group felt uncertain about purchasing a diesel vehicle as they were unclear how it would be worked out financially for them.

Experts also believe that this isn’t the end of surcharges or increases in costs for diesel drivers. As the government works towards their aim of banning new petrol and diesel vehicles by 2040, more steps will be taken to discourage drivers – or make it too expensive to buy them new, or perhaps even second hand.

What do you think of these changes to VED? Are the Government tackling one problem at the expense of not hitting the other main causes of NOx, such as public transport, trucks, ships and central heating systems? Let us know in the comments below.

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