Changes to the road fund licence
From 1 April 2017 the road fund licence is changing, but how will it affect you?
Some of the most extensive changes seen to the way road tax is calculated will come into force from 1 April 2017. Any new car registered after this date will be subject to the new vehicle tax regulations, and for some it might mean a hike in the amount they have previously paid.
Gone is the simple, C02 based taxation system as vehicles have become much more efficient, leading to more and more vehicles falling into the lower, cheaper bands. In comes a system based on C02 and the cars value which may result in many vehicles’ Excise Duty increasing exponentially.
If you’re concerned about how this might affect a purchase you’re considering making this year, we’ve done a few calculations for you below. But more on that later. First, you will need to understand exactly how the new tax is calculated.
The new road fund licence is relatively simple to understand. As with the current system, your first year’s road tax rate will be based on the vehicle’s C02 levels. However, after that the vehicle will fall into a standard rate depending on the C02 levels and the vehicle’s value.
From year two, cars with zero emissions (for example electric cars) will remain free to tax. Whilst ‘standard’ cars – those with a combustion engine in them (yes, even hybrid cars) – will be taxed at a flat rate of £140 per annum. Premium cars (retail price at more than £40,000 after VAT and options have been added) will have a £310 premium added to their bill each year for five years.
Light commercial vehicles and trucks will not be affected by the rises in Vehicle Excise Duty, but Citan and Vito Tourers will as they are classed as cars, not vans. This could mean a costly addition to annual costs for you.
But is there another option? Yes, buy your new vehicle before the new rules come into force.
Vehicles purchased before 1 April 2017 are not affected by the new road tax regime, meaning that if you are planning a new purchase this year, it might be prudent to purchase your new vehicle before the new rates take hold. For example, over a six year period a new Vito Tourer 119 CDI Extra Long would cost £1,110 in tax using the current regime. However, if you were to purchase the van after 1 April 2017, the same van would cost £2,750 in Vehicle Excise Duty over the same 6 year period.
Purchasing your new Vito Tourer before 1 April 2017 would save you £1,640 over six years.
Vito Tourer 119 Select Extra Long (costing over £40k inc. VAT)
Pre 1 April 2017 Vehicle Excise Duty
| First year rate | £185 |
| Years 2-6 rate | £185 |
| Total payable over 6 years | £1,110 |
Post 1 April 2017 Vehicle Excise Duty
| First year rate | £500 |
| Years 2-6 rate | £140 |
| Premium payable years 2-6 | £310 |
| Total payable over 6 years | £2,750 |
Citan 109 CDI Tourer Long
Pre 1 April 2017 Vehicle Excise Duty
| First year rate | £0 |
| Years 2-6 rate | £30 |
| Total payable over 6 years | £150 |
Post 1 April 2017 Vehicle Excise Duty
| First year rate | £160 |
| Years 2-6 rate | £140 |
| Total payable over 6 years | £860 |
Contact our experienced sales team to discuss what implications the changes in Road Fund Licence will have on a new Citan or Vito Tourer you are considering purchasing. Alternatively email info@rygor.co.uk for more information.
For more information, here are the new tax bands
| CO2 emissions (g/km) | First year rate | Standard rate (year two onwards) | Standard rate (year two onwards) for cars costing >£40,000 – payable for five years |
|---|---|---|---|
| 0 | £0 | £0 | £310 |
| 1-50 | £10 | £140 | £450 |
| 51-75 | £25 | £140 | £450 |
| 76-90 | £100 | £140 | £450 |
| 91-100 | £120 | £140 | £450 |
| 101-110 | £140 | £140 | £450 |
| 110-130 | £160 | £140 | £450 |
| 31-150 | £200 | £140 | £450 |
| 151-170 | £500 | £140 | £450 |
| 171-190 | £800 | £140 | £450 |
| 191-225 | £1,200 | £140 | £450 |
| 226-255 | £1,700 | £140 | £450 |
| More than 255 | £2,000 | £140 | £450 |