D-Day. The VED changes are finally here

D-day. If you’re reading this, then we’re making two assumptions. The first is that you like to leave things to the last minute and the second you’re in the market for leasing a car. With the VED changes all but setting on the horizon, today is the final day where registered vehicles in excess of £40,000 won't be subjected to the premium fee of £310 for years two to six, regardless of their emissions.

It’s a radical overhaul, which will inevitably affect a lot of prestige leasing market and, on the whole, a majority of our customer base. So, we think it’s important that you get to grips with the changes if you haven’t already.

The main change in philosophy is that while the amount of VED you pay will be subject to your car’s emissions, its impact on the rate banding has substantially diminished. Now it seems that VED will also be more weighted towards the value of the car and not just the emissions they produce. It’s particularly odd move for a government who had expressed an eagerness to push hybrid/low emission vehicles, especially in the past few years. So with these changes, the lure that some of the more prestigious hybrids once posed has greatly diminished.

New cars will still be divided into 13 bands. However, this will only be for the first year. The main change here is that only zero-emission vehicles, like electric cars, will be applicable to the lowest band. But the changes really come into full flow in years two to six. While a flat rate of £140 per year for petrol and diesel will be applied to vehicles under the value of £40,000, cars over that threshold will be subject to a premium fee supplement of £310, regardless of their emissions.

This means that electric cars that break the value of £40,000 that would have been tax-free today, will no longer be the attractive proposition they once were. So, if you were in the market for a Tesla, you might want to think about acting on it pretty soon.

Here’s how the bands look after 1^st April 2017.

Emissions (g/CO2/km) First-year rate Standard rate*

0 £0 £0

1-50 £10 £140

51-70 £25 £140

76-90 £100 £140

91-100 £120 £140

101-110 £140 £140

111-130 £160 £140

131-150 £200 £140

151-170 £500 £140

171-190 £800 £140

191-225 £1200 £140

226-255 £1700 £140

over 255 £2000 £140

*cars over £40,000 pay £310 supplement for 5 years.

If you have any further questions on the VED changes, then please get in touch.