2019 car tax increase – how will it affect me?

More changes are being made to car tax charges in April 2019, following announcements made by Chancellor David Hammond in his spring and autumn budgets last year. Read on below to find out how this affects you and what you need to look out for.

Since 2017, major changes have been made to the tax system. Much of this has been centred on car emission rates as the government continues to encourage drivers to use vehicles that emit far lower levels of pollution.

Initially, a flat rate of £140 was introduced for any cars emitting CO2, with hybrids benefiting from a £10 discount, while zero-emission cars did not have to pay anything at all. This was followed by the introduction of a sliding scale first-year charge, which saw the most polluting cars being hit with the heaviest fees. Any cars that cost more than £40,000 had to pay a premium price of £310.

In 2018, diesel cars that didn’t already meet the exhaust pollution criteria (known as the Euro emissions standards) were moved up into a more expensive first-year band. This criteria became even more strict in September 2017 by adding another emission test referred to as Real Driving Emissions (RDE). Recently, this test was upgraded again to the RDE Step 2. As it stands, there are no diesel cars that meet the RDE Step 2 guidelines as they do not come into effect in Europe until 2021.

 

How much more car tax will I pay this year?

2019 sees the introduction of further changes that will require drivers to pay more. Vehicle Excise Duty (VED) tax will rise in line with inflation this year, which has an impact on both the first-year rate and annual tax vehicle costs.

From April 1 2019, any petrol or diesel car registered after April 1 2017 will have to pay an annual rate of £145, which has increased from £140. However, the existing £10 hybrid discount will still be available.

First-year rates will also rise in tandem with the retail price index. For the most polluting cars, this could be an increase of anywhere up to £65. Any cars with a list price of over £40,000 will also have to pay £320, instead of £310, for the next five years.

Tax increase for cars registered on or after April 2017  

The following first-year car tax rates apply to cars registered after April 1 2017 and will come into effect from April 1 2019

2019:

CO2 Emissions g/km

Standard Rate (Year 2 onwards)

First Year Rate

First Year Rate Diesel Vehicles

0

£0

£0

£0

1-50

£140

£10

£25

51-75

£140

£25

£105

76-90

£140

£105

£125

91-100

£140

£125

£145

101-110

£140

£145

£165

111-130

£140

£165

£205

131-150

£140

£205

£515

151-170

£140

£515

£830

171-190

£140

£830

£1,240

191-225

£140

£1,240

£1,760

226-255

£140

£1,760

£2,070

Over 255

£140

£2,070

£2,070

Tax increase for cars registered before April 2017  

Anyone who owns a car that was registered in the old scheme will also experience a car tax rise ranging between £5 and £15, which you can see in more detail in the table below:

Tax Band

CO2 Emissions g/km

Standard Rate (2017-2018)

Standard Rate (2018 - 2019)

A

0-100

£0

£0

B

101-110

£20

£20

C

111-120

£30

£30

D

121-130

£115

£120

E

131-140

£135

£140

F

141-150

£150

£155

G

151-165

£190

£195

H

166-175

£220

£230

I

176-185

£240

£250

J

186-200

£280

£290

K

201-225

£305

£315

L

226-255

£520

£540

M

Over 255

£535

£555

 

What is car tax?

While it’s important to know how much you are paying for your road tax each year, it’s also good to have an understanding of why it is being paid.

Car tax is also referred to as road tax, or by its official title, Vehicle Excise Duty (VED), and it is a necessary part of driving a vehicle on UK roads. Just as you need to ensure the vehicle has insurance cover, you also have to pay an annual fee for it to be driven legally.

The money generated from VED is used by the government to pay for safety improvements, road maintenance and upkeep. It is estimated the total amount received by the Treasury is in the region of £5 billion each year.

The idea behind road tax is that the people using the roads are contributing towards their upkeep. Once received, the money goes into central government coffers, with VED being paid directly into road improvement funds – though this is set to change in 2020.

Why does road tax increase?

Prices do not increase each year. In most cases, they are changed to move in line with inflation, so the cost involved with building, repairing and maintaining the UK’s roads and highways remains manageable.

The more recent changes are part of the government’s wider commitment to reducing damage caused to the environment. The aim is to potentially reduce emissions to “net zero” by 2050. The government hope the changes made to road tax charges in recent years will encourage more drivers to use cars that produce less dangerous pollutants.

Is car tax included with my car lease?

At Leasing Options, road tax is included in a number of our contracts, so customers do not have to worry about organising it separately. To find out more details, just get in touch with our friendly team and we can tell you everything you need to know. Don’t forget to check out the rest of the Leasing Options blog for more car news and updates.