Can You Afford A Car After The NEW Vehicle Tax Changes?

Last Updated: 28th Apr 2017
Can You Afford A Car After The NEW Vehicle Tax Changes?

28th April 2017

After April 1st drivers will face new road tax changes on any newly registered car. For the first time, any car that uses fuel will be charged Vehicle tax, including hybrids. Whereas before, hybrid cars were exempt, now only electric cars are exempt because they produce zero carbon emissions. This means that Vehicle tax for the first years has risen dramatically on a large variety of cars. However, at the bottom end where emissions are lowest, there are lower rates of Vehicle tax.

For any driver who registers a car for the first time will face the new Vehicle Tax regime. It is only the first year that sees a differentiation between the amount of tax you pay dependent upon your carbon emissions. In the second year that equals out for £140 per year and for cars that use alternative fuel, it'll be £130 per year thanks to the £10 discount for using an alternative fuel source.

Also for the first time, the value of the vehicle will be taken into account. For any car registered that has a value over £40,000, there will be an additional charge of £310 per year. Any car producing carbon emissions worth over £40,000 after the first year will be charged £450 in Vehicle Tax. After those five years, drivers will simply pay the standard rate.


Standard Rate

Value of £40,000+











How the changes will affect your lease

How the new Vehicle Tax changes will affect you will depend entirely on whether you will be choosing a new car or a used car. At Hippo Leasing, brand new cars are available through Contract Hire for both business and personal use. Vehicle Tax is folded into the price of a Contract Hire agreement meaning on the newest cars, you will not notice the price of Vehicle Tax yourself.

If you are looking for a used car, you will have to pay the Vehicle Tax yourself. These new changes may not necessarily affect you with a used car because it will have been registered before, so you may be paying on the old regime. However, because you will be on a finance option, the Vehicle Tax will not be folded into the price.

That means, because the first year rates vary between £0-£2000, you could end up with a large tax payment on top of your finance payments depending on your chosen vehicle. Furthermore, if your car is valued for than £40,000, you will be required to pay £450 for the following five years.

If you want to afford a new car under the new Vehicle Tax regime, it might be well worth considering leasing a car under Contract Hire. The cost of the tax is folded into the monthly payments so you don’t suffer from an additional payment on top and you hand the car back at the end of the agreement without any further hassle.

We have a great selection of brand new cars available on Personal Contract Hire ready for your browsing. If you see one you are interested in, enquire with us and our staff will work with you to work out the right agreement for you.

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