The Way VED is Calculated Has Now Changed
If you’re a driver in the UK, you’ll know that you have to pay for something called Vehicle Excise Duty or a road fund licence (commonly called car tax or road tax).
The amount you pay depends on factors such as engine size, fuel type and the amount of CO2 emissions your vehicle generates at the time it is first registered. In simple terms, the lower your CO2 emissions are, the lower the rate of your vehicle excise duty.
Previously, this was measured through the New European Driving Cycle test (NEDC) which was first developed in the 90s and last updated in 1997. However, with the rise in advanced technology in the last decade, NEDC testing has become outdated and is no longer truly representative of real-life driving.
A new method of vehicle testing, called Worldwide Harmonised Light Vehicles Test Procedure (WLTP), has now replaced the old NEDC test. The WLTP method is able to determine a more realistic evaluation of your vehicle’s official fuel consumption (mpg), driving range and CO2 emissions (g/km).
As a result, your vehicle’s CO2 emission output will change, potentially placing it in a higher tax band to its current rate, causing an increase in the cost of your road fund licence for the first year. This only applies to the first year’s VED - subsequent year’s VED will be unaffected by this change.
When did the VED / Road Tax rates increase?
The change was introduced on 1st April 2020 for Vehicle Excise Duty and 6th April 2020 for Benefit-in-Kind on Company Car Tax and the new charges will only affect your very first Vehicle Excise Duty payment when you buy and register a new vehicle after these dates.
How does this impact me?
If the new vehicle you’ve ordered was registered before the 1st April 2020, the first year VED cost will be as shown on your order form.
If the new vehicle you’ve ordered is registered from 1st April 2020 onwards, the first year VED cost may increase versus what is shown on your order form. If this is the case, we will advise you of any additional VED cost due.
Please contact your Sales Executive if you have any questions.
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