Emissions and Tax - A Guide

Road tax rules have recently changed - so how do they affect you?

One deciding factor is when the car was registered; if you’re in the market for a brand new car, the new rules will apply, but if you’re shopping for a nearly-new or used model it could go either way.

Pre-March 2001 cars

For cars registered before March 2001, your tax rate will depend on the size of the engine -vehicles with engines larger than 1549cc pay a heftier rate. At the time of writing, 12 months’ tax on lower-rate vehicles is £150, and higher-rate vehicles are charged at £245.

March 2001 - April 2017 cars

Most cars on the road today were registered after this date. Cars registered between March 2001 and 1st April 2017 are subject to a set of rules that still apply - and will continue to apply in the future. This means your annual road tax charges are calculated based on your vehicle’s tailpipe emissions. The lower the emissions, the cheaper your tax rate.

Cars emitting less than 100g/km of CO2, like the BMW 320d EfficientDynamics Plus Automatic, qualified for entirely free road tax. The flip side is that more polluting cars - like some high-performance models and SUVs - can be relatively expensive to tax on an ongoing basis: up to £515 a year, in fact. This had a punitive effect on the used values of more polluting vehicles.

Manufacturers like BMW have been working hard to reduce their vehicles’ emissions, both to tempt customers drawn to low-tax vehicles and to minimise their impact on the environment. But the consequent popularity of low-emissions vehicles has created a problem for the Treasury, because revenue from road tax has fallen to unsustainably low levels.

Post-April 2017 cars

The changes are designed to generate more tax revenue, so ultimate mean the cost of owning a brand new car is going up on average.

Tax rates are still linked to the car’s tailpipe CO2 emissions, but only for the first year. Charges in the first year range from £10 to £2,000, although most vehicles – those emitting less than 150g/km of CO2 – are taxed at £200 or less.

In subsequent years, every vehicle defaults to the same, statutory £140 annual charge. The exceptions are ‘alternative fuel’ vehicles like plug-ins and hybrids, which receive a nominal £10 discount; and zero-emissions (i.e. pure electric) vehicles, which are tax exempt.

If this all sounds too simple, it is. There’s a twist: any vehicle with a list price of more than £40,000 is subject to an additional, annual £310 charge for five years, starting in the second year. The £40,000 threshold is based on the car’s base price plus any options you specify, such as metallic paint or leather upholstery, and delivery charges.

Therefore, the only models that qualify for completely road tax-free driving are those with zero CO2 emissions and a list price beneath the £40,000 threshold - vehicles like the pure electric version of the BMW i3.

Get in touch

Contact a member of the team at Cooper BMW to discuss the tax implications for any vehicles you’re interested in, and arrange a test drive for one of our low-emissions vehicles.