BVRLA FACT SHEET
This is the BVRLA information on theVED changes which take affect on 1st April 2017
Key impact
At the Budget 2015 the Chancellor announced reform to the Vehicle Excise Duty (VED) regime for cars. These reforms will mean changes to member’s system as the list price will determine the cost of VED in years 2 to 6 of the vehicles life. It will also impact on how much VED is refunded if a vehicle is disposed of in its first year.
Background
In response to the falling CO2 emissions of modern cars, a new system will be introduced for cars registered after 1st April 2017. The first year’s tax for new cars will still be linked to CO2 emissions, but in subsequent years the tax will be calculated as follows:
Vehicle Tax Rate (years 2 to 6) Tax Rate (year 7 onwards)
Zero emission cars costing less than £40,000
£0
£0
Cars costing £40,000 or less
£140
£140
Cars costing more than £40,000
£140 + £310 = £450
£140
Zero emission cars costing more than £40,000
£310
£0
These changes only apply to new vehicles registered after 1st April 2017. All existing cars on the road will continue to pay at the graduated VED rates (see fact sheet 550 VED Taxation Regime).
VED Bandings for First Year
CO2 emissions (g/km) First Year rate £
0
0 1-50 10
51-75
25 76-90 100
91-100
120 101-110 140
110-130
160 131-150 200
151-170
500 171-190 800
191-225
1200 226-255 1700
Over 255
2000
Definition of List Price
The Finance Act defines list price as including the price of the vehicle and any non-standard accessory which is attached to the vehicle when it is first registered.
This includes:
▌ Manufacturers Recommended Retail Price
▌ The price of any non-standard option – fitted by the manufacturer
▌ VAT
▌ Electric cars – if the battery is leased then the cost of the battery constitutes parts of the list price
▌ Delivery charges including pre delivery inspection charges
It does not include:
▌ Warranty / insurance and service packages etc
▌ Any non-standard accessory – fitted by the dealer
▌ Modifications such as ‘police packs’, ambulance / fire engine modifications
▌ Modifications for disabled drivers
▌ First registration fee and cost of first licence
The list price will not be displayed in view vehicle record but there will be a field which shows how long the additional rate of tax is payable until.
Refunds of First Year Licence
Refunds of first year licence (FYL) will be calculated as follows:
Cars £40,000 and under
▌ Cars with CO2 emissions of 100g or below, refund based on FYL actually paid
▌ Cars with CO2 emissions above 101g, refund based on the £140 rate
Cars above £40,000
▌ Cars with CO2 emissions of 150g or below, refund based on FYL actually paid
▌ Cars with CO2 emissions above 150g, refund based on the £450 rate
This approach to refunds is in place today where vehicles which have the ‘showroom tax’ (higher VED in the first year than subsequent years) are only able to get a refund based on the standard rate. However, this is only applicable for vehicles over 165 g/km CO2 when the new VED regime is introduced this will impact vehicles over 110 g/km CO2.
Practical examples
Audi A4 all road – CO2 emissions 145, list price £26,350.00
The tax in year 1 on this vehicle would be £200.
If the vehicle was sold in month 6, the refund would be based on the £140 rate so the rental or leasing company would be losing out on £30.00.
Jaguar XF S – CO2 emissions 144 list price £49,995
The tax in year 1 on this vehicle would be £200.
If the vehicle was sold in month 6, the refund would be based on the FYL paid so there would be no loss.
Mercedes S 350d – CO2 emissions 155, list price £68,870
The tax in year 1 on this vehicle would be £500.
If the vehicle was sold in month 6, the refund would be based on the £450 rate. So the loss would be £24.99.
Six month tax discs
There will not be a six month licence option for any of the first year rates. There will be a six month option for paying the standard rates and additional rates.
Alternative fuel discount
There is still a discount of £10 per year for alternative fuel vehicles.
Advanced registrations
The list price can be recorded as the list price on the day before the advanced registration is submitted to DVLA.
Practical example
If an advanced registration is submitted on the 15th of the month, then the list price will be the price on the 14th of the month (i.e. the day before the advanced registration is submitted to DVLA). The vehicle tax would start from the 1st of the following month.
Advanced registrations are completed by vehicle dealers to avoid the rush at the beginning of the month to register and
tax cars which sometimes delays vehicles getting out to customers. This is not to be confused with pre-registrations.
Errors and omissions
The DVLA will receive list price information from the manufacturers directly. The DVLA will not be checking the accuracy of this data or verifying it. If a mistake is made the manufacturers will need to rectify the error and advise affected customers accordingly.
Practical advice
Members may wish to consider the following:
Vehicles with long lead-in times – Vehicles which will be delivered post 1 April 2017 will fall into the new VED regime therefore you will need to make sure your quotation system reflects this for vehicles above £40,000.
Selling a vehicle with the supplement – The vehicle registration document when first printed will contain information in the “additional notes” area to show that the supplement is payable for 6 years from first registration. When the V5 is issued to the second keeper this information will be updated to include a date when the supplement will stop being paid.
Please contact the BVRLA if you have any query or wish to check on the above