iv. What do you need to consider now?
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1 Our Guide to Vehicle Excise Duty (VED) 2017
2 Contents i. What has changed as part of the reform? Background to the Reform The new VED system The Highlights ii. New VED system for cars registered from 2017 Rates and bands table for new VED system ii. What does the new banding look like in terms of vehicle choice? 0-50 gco2/km gco2/km 151+ gco2/km iv. What do you need to consider now? Monthly rentals will be affected Your banding model and vehicle choice policies may need reworking Exploring cleaner, greener, more tax effective options v. How can we help? Book a free Fleet Review
3 What has changed as part of the reform? Background to the Reform The outgoing VED structure based on CO2 bands was introduced in 2001 when average UK new car emissions were 178 gco2/km. The Band A threshold of 100 gco2/km or below which cars pay no VED was introduced in 2003 when average new car emissions were 173 gco2/km. Since then, to meet EU emissions targets average new car emissions have fallen to 125 gco2/km. This means that an increasingly large number of ordinary cars now fall into the zero- or lower-rated VED bands, creating a sustainability challenge and weakening the environmental signal in VED. This is set to continue as manufacturers meet further EU targets of 95 gco2/km set for Additionally, the system results in significant unfairness as owners of newer cars pay little or no VED while owners of older cars generally pay higher rates. The new VED system The reformed VED system retains and strengthens the CO2-based First Year Rates (FYRs) to incentivise uptake of the very cleanest cars whilst moving to a flat Subsequent Rate (SR) in order to make the tax fairer, simpler and sustainable. To ensure those who can afford the most expensive cars make a fair contribution, a supplement of 310 will be applied to the SR of cars with a list price (not including VED) over 40,000, for the first five years in which a SR is paid. The Highlights The threshold for 0 tax has been significantly reduced to apply only to zero-emission cars The SR is now set at a flat charge of 140 across all CO2 bands, except for zero-emission cars which is 0 There is a new supplement charge of 310 to be added to the SR, for five years, for cars with a list price of over 40,000. The list price is the vehicle purchase price, including all added options and VAT The new system is only applicable to vehicles registered from 1 April, All cars registered before this will remain in the current/outgoing VED system This is only applicable to cars not commercial vehicles
4 New VED system for cars registered from 2017 The below table shows the new charge system (on the right) against the outgoing system (on the left):. Pre-April 2017 Post-April 2017 Emissions (gco2/km) First Year Rate (FYR) Subsequent Rate (SR) First Year Rate (FYR) Subsequent Rate (SR) Over *cars over 40,000 pay 310 supplement for 5 years Why not print this page off for quick reference?
5 What does the new banding look like in terms of vehicle choice? We have split the VED banding into three main CO2 groups: 0-50 gco2/km gco2/km 151+ gco2/km BMW i3 EV Hyundai IONIQ EV Ford Focus EV Kia Optima GDi PHEV Audi A3 Sportback e-tron Volkswagen Passat GTE Mitsubishi Outlander PHEV BMW 3 Series 330e Mercedes-Benz C-Class C350e PHEV Volvo V60 Twin Engine Hybrid VW e-golf Electric Car 85Kw Auto Mercedes-Benz B-Class Electric Drive b250 e Sports Auto Toyota Prius Plug-In Hybrid 1.8 VVT-i Business Edition CVT Hyundai IONIQ 1.6 GDi Hybrid SE DCT Toyota Auris 1.7 VVT-I Active Hybrid Auto Peugeot L BlueHDi Active 75 S&S Lexus CT200h S E-CVT Toyota C-HR 1.8 VVT-I Icon Hybrid 122hp Auto Vauxhall Astra Hatch 1.6 CDTi Tech Line 110PS S/S ecoflex BMW 3 Series Saloon 320d ED Plus Jaguar XE 2.0d R-Sport 180PS Au Audi A3 Saloon 1.4 TFSI S Line 150PS Mazda 1.5 SE-L Nav 90PS Skyativ-G Auto Volvo S T4 Business Edition 190HP Mercedes-Benz E-Class Saloon E 200 d SE 9-speed G-Tronic VW Golf Estate 1.4 TSI S 125PS BMT Mercedes-Benz C-Class Estate C 200 Sport 4Matic 7-Speed G-Tronic BMW 3 Series Saloon 330i Luxury Audi A3 Saloon 2.0 TFSI Quattro S3 310PS S Tronic Ford Edge Vignale 2.0 TDCi 180PS AWD Nissan X-Trail 2.0 dci N-Vision 177 X-Tronic CVT Honda Civic Tourer 1.8 i-vtec S 142PS Auto Kia Sportage 2.0 CRDi KX-2 AWD 134hp Auto Ford Mondeo Vignale Estate 2.0 EcoBoost BMW 1 Series M14Oi Hyundai Tucson 2.0 CRDi SE Nav 185PS 4WD Infiniti QX Premium 211PS AWD Auto Volvo XC T% SE Nav 245HP Auto Vauxhall GTC VXR 2.0i 16v Turbo 280PS Call us for a quotation on any of the above vehicles
6 What do you need to consider now? Monthly rentals will be affected Contract hire providers like ourselves with have to allow for the increased VED fees in our monthly rentals which means, compared to the same vehicle pre-april 2017, the amount you will pay each month will most likely increase. How much this will go up will depend on the amount of VED applied to the vehicle across the term of the lease. And how this is determined is based on the car s CO2/km emissions. Here are a couple of examples of how VED will increase: Where you may see a more considerable increase is when a vehicle list price exceeds 40,000. As well as paying the FYR and SR, a car over 40,000 will also have a 310 supplement charge attached, which is applicable for the first five years. Here is an example to help demonstrate this: Be aware of added options and extras that could tip a car s list price over 40,000!
7 Your banding model and vehicle choice policies may need reworking Like most businesses who run a fleet of vehicles, they use a banding system to group the cars they offer their employees. The bands may be based on job role, seniority, length of service etc. With the new VED system you may now see cars fall out of your banding parameters so you may need to look for alterative vehicle options or there may be ways to rework your banding to keep vehicle choice consistent. Exploring cleaner, greener, more tax effective options To help reduce VED rates for your business, you could look at replacing some of your current fleet with ultra low emission vehicles (ULEVs) with emissions of 0-50 gco2/km. These vehicles offer a very attractive 0 rate across the board, meaning you don t pay anything in VED for the life of your lease. How can we help? With over 35 years experience, Sandicliffe Motor Contracts can support you in effectively managing this process. Our consultative and personal approach means we can advise you on a one-to-one basis and help you understand what is best for you and your business. Book a free Fleet Review no fee, no obligation We can arrange a suitable time to meet and discuss your current fleet set-up, whether that be outright purchase, contract hire, hire purchase. We can then look at how your business is personally affected by the new VED system, and what corrective action to take. sandicliffemotorcontracts.co.uk To book an appointment, contact us today on: ved@motorcontracts.co.uk
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