With all the fuss about Brexit, the value of the pound and Mr Trump across the pond you could be forgiven for missing a change our vehicle taxation system.

As of April 1st 2017 new rules come into place implemented by Her Majesty’s Revenue and Customs, which will effect anyone that purchases a new vehicle after this date.

In 2001 we moved from a tax system based on the size of engine in a car to one based on carbon dioxide emissions (CO2), that’s to say the lower the emissions the lower the tax paid.

This change in policy led to a significant reduction in carbon dioxide emissions. In 2001 the average CO2 emission per vehicle was 170g/km. By 2015 this was just 120g/km. So what is changing and why?

The first major change is that the CO2 emissions your new car emits will only be linked to your tax banding in the first year, and this figure is increasing.

In the second year the tax rate moves to a flat rate of £140 for a petrol or diesel car, meaning that for those of us that drive a low CO2 emitting vehicle we will only have the tax benefit of this in the first year of ownership. What this means is that if you purchase a new car with CO2 emissions of 120g/km on March 31st 2017 you will pay no road tax in your first year, and £30 per year thereafter. If you purchase your new car a day later your first year’s tax goes up to £160, and £140 per year thereafter. If you own your new car for 5 years the cost of taking it in April rather than March goes up from £130 to a whopping £720.

The second major change only affects those customers wishing to purchase a premium brand. As of April 1st any vehicle that has a list price of over £40,000 will attract an additional rate of £310 per year after the first year until the car is 5 years old.

Comparing this to today’s figures the difference is even more striking. A premium brand diesel model emitting 131–140 g/km registered before April 1st will cost £650 over 5 years in road tax. As of April 1st this will move to an eye-watering £2000!

This will have a major impact on the cost of ownership of a premium brand vehicle, and may well see a shift from executive saloons and 4x4s to smaller versions in their respective ranges.

This will also have a significant on the company car market. The increase in the cost of road tax could well see a shift away from companies supplying company cars to a car allowance model, whereby the individual would be responsible for the cost of ownership.

So why is this happening? It is certainly not for environmental reasons. If anything the new taxation system makes carbon dioxide emissions almost irrelevant when deciding what new car to buy, which for me is a backward step. We need to see the changes for what they are – a tax increase from the government. So, if you are considering buying a new car this year you may want to complete the transaction sooner rather than later to beat the tax man.

Wesley Cole is a Market Area General Manager for Now Vauxhall, and has been an industry professional for 18 years. He has represented a number of brands, including Vauxhall, Nissan, Renault, Toyota and Mercedes-Benz.

By Wesley Cole