Planning on buying a new car this year? Then you need to know about the new tax rules coming into effect as of the April 1st 2017.

The announced changes take C02 emissions into account when calculating tax for vehicles, with higher tax rates affecting the biggest polluters in their first year of registration.

In the second year of registration, the majority of vehicles will move to a standard annual rate which will be maintained for the following years of ownership.

The vehicles included in the new rules are specified as;

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 of no more than eight seats in addition to the driver’s seat.

Category M1 Special Purpose (M1SP) – Passengers carrying vehicles which are designed and constructed for special purposes.

Category M1 (M1G) – Designed for off-road use and meeting designed criteria.

So what does this actually mean for you if you are going to buy a new car?

If you manage to buy and register your new car before the 1st of April 2017, you will not be affected by these changes. Cars registered after the 1st will be subject to a tax rate dependant on C02 emissions.

However, after the first year of ownership, you will only have to pay a standard rate of annual tax (£140), which applies to the majority of vehicles.

If the cost of the new vehicle is over £40,000 you will have to pay a £310 premium on top of the standard rate, though this will only apply from the second year of registration and continue for five years.

Following the passage of five years, your rate of tax will return to £140.

The same rule will apply to electric vehicles exceeding a list price of £40,000. Despite the fact that they have zero emissions, they will be subject to the £310 premium which will revert to £0 after a five-year period.

If you decide to buy an alternative fuel vehicle such as a hybrid, bi-ethanol or LPG, you will actually receive a £10 reduction on the standard rate of tax.

Here is a detailed breakdown of how much tax you will have to pay for the amount of C02 your car emits.
new vehicle tax rules
Remember, if you buy a car with a listing price of over £40,000 you will have to pay an extra £310 on top of the standard rate for five years.

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