In less than a month’s time on the 1st of April, prospective owners of electric vehicles are set to have a fresh opportunity presented to them to make some savings.
Once the new legislation takes effect at midnight that day, the level of Vehicle Excise Duty (VED) for zero pollutant cars will plummet, whilst that of more traditional petrol cars is set to change to punish heavy polluters.
In practice, the amount you will have to pay depends on what category your vehicle falls under, in terms of pollutant emissions. Zero-carbon emitters such as electric and hydrogen cars will by and large be exempt from VED, whereas all other vehicles will have to pay £140 a year as a base rate.
For those that cost more than £40,000 though regardless of whether or not they are electric, a new fee will apply of £310 every year for five years.
After these 5 years are up, the £310 is removed and the tax rate will return to £140 if petrol powered, or if these £40,000 plus vehicles do not give off any emissions, they will be free of the £140 constant tax.
For the majority of road users though, the rate of Excise Duty will be set via a series of ‘CO2 bands’, with the amount of tax owed dependent on the level of emissions. Similar to the methods that have traditionally been used to calculate the tax level for commercial vehicles, the more you pollute the more you will pay. For example a vehicle emitting 111-130g/km of carbon dioxide will have to pay £160, and a vehicle within the 131-150g/km bracket will have to pay £200 a year-on top of the ever-present £140 mentioned earlier. At maximum, the heaviest polluters which are anything above 255g/km will incur a massive £2000 fee initially, but only as part of the additional rate for the first five years.
The new system also takes into consideration the fact that over the years, the price of various makes and models of vehicles will fluctuate. Therefore the value of your vehicle will be taken from the level it was when it was purchased, so you can’t look to take advantage of the system by making a purchase when the cost comes down!
Vehicles also purchased going forward from the end of March will also be divided into one of four categories. These are entitled ‘M, M1, M1SP and M1G’. Category M is your standard 4 wheeled vehicle designed for people transport, M1 is for larger vehicles but with no more than 8 seats, M1SP refers to special purpose vehicles such as ambulances and caravans, and M1G is the category for off-road vehicles like tractors. Regardless of category however, the new charges will still apply.
But why the need for such changes to the law? One common theory is that under the current system, more and more vehicles were being produced that came in below the lowest rate of tax due to technological advancements, which meant that the Government was losing out on a sizable amount of revenue. Others seem to think that the decision was motivated by a concern for the environment, to encourage the purchase of vehicles that are comparably less harmful to our quality of air. There’s been the long-standing issue of fuel efficiency in regards to trucks and lorries in particular, so perhaps this is a move aimed at making the operators of commercial vehicles think twice before investing in such major sources of carbon pollutant gases.
Either way though, this change will only benefit anyone looking to ditch petrol for a cleaner form of vehicular transport. The levy against non-pollutants that cost £40,000 or more does appear to be a money-making move aimed at those the Government knows has money to spend, but the vast majority of electric cars being purchased will be exempt from this figure.
Electric cars are already on their way to displacing their less eco-friendly equivalents, and it looks as if this trend is set to continue with legal moves such as this.