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Changes to the way vehicle excise duty will be charged is to undergo a significant change for all vehicles registered from April 1. KeeResources has provided a guide to the changes.

  • The change

The standard rate of VED will be a constant £140 for any vehicle emitting more than 0g/km of CO2 with an additional £310 surcharge for any vehicles (including zero-emission) with a P11D of over £40,000.

A £10 reduction is still offered for AFV’s (alternative fuelled vehicles).

  • Clarifications

M1 classification vehicles

These changes only apply to M1 classification vehicles.

Non M1 Classification vehicles will continue to be taxed using their current regime.

Category M: Motor vehicles with at least four wheels designed and constructed for the carriage of passengers.

Category M1: Vehicles designed and constructed for the carriage of passengers and comprising no more than eight seats in addition to the driver's seat.

List price

This is the price provided by the manufacturer / dealer, and reflects the vehicle list price on the day before it is first registered and taxed.

o This does not include first registration fee

o This does not include any modifications for police / fire / ambulance service

o This does not include any modifications to assist disabled drivers / users

o This does not include any service or warranty packages sold with the vehicle

o This does not include any non-standard dealer fitted options

o This does include any factory fit options

o This does include VAT (at the relevant rate)

o This does include the price of the battery on electric battery lease vehicles

o This does include delivery and PDI charges

o This does include any discounted options, at their full list price

o Vehicles will be listed at their full Price, discounts (including any grants provided to electric vehicles) are not taken in to account

Example: With discounts and free options, this vehicle would still move from the £140 VED per year, to the additional rate £450 VED per year, due to the addition of metallic paint and leather upholstery:

Example

Vehicle price (exc VAT)

Basic list price: £32,250.00

Discount: (- 10%) £3,225.00

Delivery: £550.00

Sub total: £29,575.00

Options (exc VAT): metallic paint £500.00

FOC paint discount: £500.00

Leather: £833.33

Options total: £833.33

Transaction price (inc VAT): £36,490.00

List price: £40,960.00

The list price can be changed by the dealer when the vehicle is registered

This is to reflect any price changes between the initial price data, which was sent to the DVLA and shown on the V55, and the day before the date the vehicle is registered.

This means that although the transactional price is unlikely to change, the price for which the vehicle is ‘listed’, and thereby taxed, may increase / decrease.

Potentially this can move a vehicle from the sub £40k bracket to the additional rate £40k+ bracket.

Example diesel

Vehicle price (exc VAT)

Basic list price - when ordered: £32,750.00

Delivery: £550.00

Price (inc VAT): £39,960.00

VED - years two to six: £140

Example diesel

Vehicle price (exc VAT)

Basic list price - day before reg: £33,000.00

Delivery: £550.00

Price (inc VAT): £40,260.00

VED - Years two to six: £450

A vehicle can still be ‘pre-registered' up to 14 days in advance of the date from which it is due to be taxed and registered.

In these instances the ‘list price’ will be for the day before the advance registration date.

  • Additional rate

The additional rate applies for the next five years (years two-six, and not years one-five)

After year six the additional rate will no longer apply.

Applies to all vehicles with a list price over £40k, even those with zero emissions.

Zero emission vehicles will have a £310 VED rate for years two-six.

  • Alternative fuel £10 reduction

As with previous years, the £10 reduction for the standard rate tax will be available for alternative fuel vehicles

This reduction applies to the standard rate only, and not the additional rate.

  • VED refund values

First year refund values will vary depending on the list price and emissions:

- List price under £40,000:

  Emissions 100g/km and under - refund is based upon the 1st year rate paid

  Emissions 101g/km and over - refund is based upon the standard rate (£140)

- List price over £40,000:

  Emissions 150g/km and under - refund is based upon the 1st year rate paid

  Emissions 151g/km and over – refund is based on the £450 additional rate

Example

Vehicle emissions: 175g/km

List price: £28,000

First year rate: £800

Refund (middle of month five): £70

Based on the standard rate of £140 PA

  • Subsequent years – will be based on the standard rate

- The additional rate is included in refunds for years two-six

i.e. total of £450 used when calculating the refund for a petrol or diesel vehicle.

> Download details of the changes (pdf)