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Car Tax: What's new?

Following the 2015 there have been a number of updates in working out current Car Tax. From April 1, 2015 , the cost of Vehicle Excise Duty (VED) or car tax rises by the cost of inflation from April 1, 2015 .

Cars that emit less than 100g/km CO2 do not pay road tax.

Cars emitting less than 130g/km of CO2 will continue to pay no first year road tax (the so-called "showroom tax"). Cars in tax bands B and C will remain at the fixed rates of £20 (band B) and £30 (band C) per year road tax respectively.

Cars in other bands will see a sharp increase in the cost of their car tax.

In addition to car tax costs, the new car buyer must also pay a one-off first-year 'showroom tax'. This means buyers now have to pay up to £1,030 in the first year of purchase for cars with high CO2 emissions, while people who buy a new car with emissions lower than 130g/km of CO2 pay nothing in the first year.

The number of tax bands increased from 7 to 13 in 2009, with increased penalties for the most polluting cars, followed by further changes in April 2014 .

Owners of low-emmission, high efficiency vehicles are incentivised with lower tax bills, whilst drivers of high-emission cars are deterred with steeper tax bills.

Recent press reports suggest that the Government could be offering drivers a lower rate of vehicle excise duty if they agree not to use the country's major A-roads and motorways.

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