Car tax doesn’t have to be taxing

After a major shake-up of vehicle excise duty – widely known as car tax – last year there are more changes on the way next month. While last year’s changes affected all models, the latest rules apply only to diesels. From April 1, all new diesel cars will move up one tax band unless they meet the latest Euro 6 standard under real driving emissions (RDE2) testing. At present, no new diesels meet the RDE2 standard, meaning all new diesel cars will cost more to tax. The change in tax band affects the first year rate – or so-called showroom tax – which is calculated based on a vehicle’s CO2 emissions. The increases range from £20 for some models to more than £500 for others. For example, first-year tax on a diesel Ford Focus with CO2 emissions of 99g/km will rise from £120 to £145. A buyer of a new Mitsubishi Shogun, with emissions of 245g/km will pay £2,070 – up from £1,700. The company car tax levied on diesels will also increase from three to per cent to four per cent but the new first-year rates apply only to cars, not vans or commercial vehicles. VED rates 2018/19 CO2 emissions (g/km) Standard rate First Year

The changes were announced in the Budget last autumn and come on top of previous changes which introduced first-year rates and had a dramatic impact on how much some cars cost to tax. After the first-year rates based on CO2 emissions, cars fall into three categories. Zero-emissions cars costing less than £40,000 are tax free; a flat rate of £140 applies to all conventional petrol and diesel cars, and hybrids are charged at £130 per year. All vehicles costing more than £40,000, regardless of emissions, are also hit with a £310 “premium levy” from the second to sixth year of ownership.