VED reform Industry brief 3

VED reform

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Vehicle tax (VED) is changing...

Our previous briefings focused mainly on the effect the new VED scheme will have on the first registration process for all M1, M1SP and M1G vehicles registered on or after 1 April 2017; this brief focuses more closely on licensing.

Vehicles registered before 1 April 2017 will continue to be taxed in the same way. Only vehicles registered on or after that date will be subject to the new tax scheme.

Future changes to the licensing serviceChanges to the current licensing system to support the new taxation rates are being developed and we are looking to test these during the autumn, ready for mid-March advanced registrations.

Next steps...We will continue to work with you to prepare for the changes, focusing on how we can help you deliver the message about the changes to the general public because you are the first point of contact with the customer. We will also continue to provide feedback on progress.

Anyone who wishes to be added to our industry distribution list to receive further communications, ask any questions about the changes and give us feedback should contact ved.reform@dvla.gsi.gov.uk

Please share this with your colleagues.

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List priceM1 (M1SP and M1G) vehicles registered on or after the 1 April 2017 with a list price over £40,000 at first registration, will pay an additional rate of £310 for five years from the start of the second licence. This is in addition to the standard rate.

All other vehicles, including M1 vehicles without a CO2 figure on the final type approval will be unaffected by these changes as will all vehicles registered before 1 April 2017.

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CO2 Current ratesRates for vehicles registered after 1 April 2017

From To BandPetrol/Diesel cars (Tax class 48 & 49)

Alternative fuel car (Tax Class 59)

BandPetrol/Diesel cars (Tax class 48 & 49)

Alternative fuel car (Tax Class 59)

Difference

0 0 A £0 £0 A £0 £0 £0

1 50 A £0 £0 B £10 £0 +£10

51 75 A £0 £0 C £25 £15 +£25

76 90 A £0 £0 D £100 £90 +£100

91 100 A £0 £0 E £120 £110 +£120

101 110 B £0 £0 F £140 £130 +£140

111 120 C £0 £0 G £160 £150 +£160

121 130 D £0 £0 G £160 £150 +£160

131 140 E £135 £125 H £200 £190 +£65

141 150 F £150 £140 H £200 £190 +£50

151 165 G £185 £175 I £500 £490 +£315

166 170 H £300 £290 I £500 £490 +£200

171 175 H £300 £290 J £800 £790 +£500

176 185 I £355 £345 J £800 £790 +£445

186 190 J £495 £485 J £800 £790 +£305

191 200 J £495 £485 K £1,200 £1,190 +£705

201 225 K £650 £640 K £1,200 £1,190 +£550

226 255 L £880 £870 L £1,700 £1,690 +£820

256 M £1,115 £1,105 M £2,000 £1,190 +£885

First licence rates First licence rates for vehicles will continue to be based on CO2 emissions.

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Direct Debit payments will not to be available for first year licences.

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Refund of first year licences Refunds of first year licences will continue to be processed in the same way as they always have been.

List price £40,000 or under – Cars with CO2 emissions of 100g/km or below, refund will be based on the first year licence actually paid. Cars with CO2 emissions above 101g/km would have a refund based on the £140 rate.

List price exceeding £40,000 – Cars with CO2 emissions of 150g/km or below, refund will be based on the first year licence actually paid. Cars with CO2 emissions above 151g/km would have a refund based on the £450 rate.

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Standard rate licences From the second licence a vehicle will be charged at either a standard rate or a standard rate plus an additional rate. Vehicles priced at £40,000 and under when first registered will pay the standard rate. Vehicles priced at over £40,000 will be charged at the standard rate, plus the additional rate for 5 years, they will then only pay the standard rate.

The standard rate for vehicles with zero emissions will be £0. The standard rate for alternative fuel vehicles will be £130. The standard rate for all other vehicles will be £140.

The additional rate for all vehicles over £40,000 will be £310, so the total per year will be £310 for zero emission vehicles over £40,000, £440 for alternative fuel vehicles over £40,000 and £450 for all other vehicles over £40,000.

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Tax class Non Direct Debit Direct Debit

12 months 6 months Single 12 month payment

Total payable by 12 monthly instalments

Single 6 month payment

Petrol/Diesel car (£40,000 or less) £140 £77 £140 £147 £73.50

Alternative fuel car (£40,000 or less) £130 £71.50 £130 £136.50 £68.25

Petrol/Diesel car (over £40,000) £450 £247.50 £450 £472.50 £236.25

Alternative Fuel car (over £40,000) £440 £242 £440 £462 £231

Electric car (Tax class 79) (over £40,000) £310 £170.50 £310 £325.50 £162.75

Cost of tax (12 and 6 month and Direct Debit options)

Emissions/Fuel List price Standard rate

Additional rate for 5 years*

Total per year

Zero emissions/Electric £40K or less £0 £0

Zero emissions/Electric Over £40K £0 £310 £310

>zero emissions/Alternative fuel £40K or less £130 £130

>zero emissions/Alternative fuel Over £40K £130 £310 £440

>zero emissions Petrol/Diesel £40K or less £140 £140

>zero emissions Petrol/Diesel Over £40K £140 £310 £450

*After the 5 year period the vehicle will be taxed at the standard rate for that vehicle

The usual 50% and 100% discounts will apply to the total price for those eligible under Personal Independence Payment (PiP).

Electric vehicles tax class Vehicles registered in the Electric tax class will continue to pay a nil rate of tax unless the original list price of the vehicle exceeds £40,000 then additional rate will be applicable for 5 years from the start of the second licence.

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How a customer will know if the additional rate of tax appliesThe V5C is being amended to indicate where a vehicle is subject to the additional rate of tax. We plan to include this as part of the special notes section which is found on the front of the document.

We also plan to reflect this on the V5C/2 new keeper’s supplement. We are currently carrying out customer insight testing around the wording.

The DVLA’s Vehicle enquiry service (VES), will also show whether the additional rate of tax applies to a vehicle and when it will end, www.gov.uk/check-vehicle-tax

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Tax remindersTax reminders will continue to show the full 12 and 6 month rates (where applicable) inclusive of additional rate where it applies. We will not be making reference to additional rate separately and this applies to the electronic relicensing also.

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Hybrid/alternative fuel vehiclesHybrid and alternative fuel vehicles registered after 1 April 2017 will receive a £10 reduction on the cost of their tax as is the current practice. The standard rate will therefore be £130 with the additional rate costing £310. First licence rates will also have the reduction meaning vehicles with CO2 of up to 50g/km will pay nothing for the first licence.

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OOJ/16/046/2 10/16

VED reform Industry brief 3

DVLA Longview Road Morriston Swansea SA6 7JL

gov.uk/dvla