New Changes To Road Fund License.

In the summer 2015 Budget Statement, the Chancellor announced that reforms to Road Fund Licence (RFL) would be introduced in April 2017.

From 1 April 2017, some of the most extensive changes to the UK’s road taxing structure will take place. Any new car registered after this date will be subject to these new rules. Generally, most cars will cost slightly more to tax than they did previously, leaving only cheaper electric cars with tax-free status.

If you’re concerned the car you have your eye on might cost more to tax in April, now is the time to get the vehicle. 

Why is road tax changing?

When the outgoing system was conceived, taxation was linked to a car’s CO2 output – this meant that cheaper, more efficient cars paid a relatively small amount while pricier, more polluting cars paid much more.

The problem with this system emerged when it became clear to the treasury that, thanks to greatly improved engine and vehicle design, many normal cars were emitting such little CO2 that they actually fell into the tax-free bracket. This lowest band was originally intended for electric, hybrid and niche low-emission cars but, as technology has improved, more conventional cars wound up here and paid no tax.

To bolster its cashflow, the government has introduced this new taxing regime to push more conventional cars back into taxation and reserve tax-free status for a handful of zero-emission cars.

What are the 2017 road tax changes?

As before, you’ll have to pay a first year tax rate that’s linked to the car’s CO2 emissions, followed by a standard rate for each year after that. The standard rate for every car is now £140 per year but models costing more than £40,000 (after vehicle options) will incur an additional £310 charge, meaning most premium models will now cost £450 in total per year to tax.

Any zero-emissions vehicle – i.e. electric cars – won’t incur either the first year or standard rate of tax but, unlike previous years, this no longer applies to plug-in hybrid models that still use a conventional combustion engine. If, however, your zero-emission vehicle costs more than £40,000 – you still incur the £310 additional cost for the first five years of ownership before returning to tax-free status.

What is included within the £40,000 ‘RFL List Price’.

  • Manufacturers List Price including VAT as at the day before the vehicle is first registered,
  • Vehicle Option Prices Including VAT as at the day before the vehicle is first registered.
  • Delivery Charges including VAT, Including any Pre-Delivery Inspection Charges (Where applicable).
  • In the case of electric cars the ‘RFL List Price’ is calculated before any OLEV grant has been applied.

What is NOT included within the £40,000 ‘RFL List Price’.

  • First Registration fee and the cost of the first license
  • Warranty/Insurance and servicing packages.
  • Options fitted by the dealer or another third party.
  • Modifications for disables drivers.

As before, tax is no longer transferrable between owners. This means if you sell your car, the new owner will have to tax it themselves – any remaining tax on the vehicle can be claimed back from the government. Also unchanged is the £10 reduction in tax rates for alternative fuel vehicles such as those converted to run on LPG.

2017 UK road tax bands

Here are the new road tax bands in full: 

*Alternative Fuel Discount of £10 on all qualifying cars.

For further details please visit:

 WWW.GOV.UK/VEHICLE-TAX 

Last Updated 23/01/2017



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