What you need to know

What’s the story?

In August, the government announced a reduction in ACC levies collected on motor vehicles (except mopeds and motorcycles, trailers and caravans) to be effective from 1 July 2015. There will be a 45 percent reduction in the average motor vehicle levy (collected in the annual vehicle licence) and a 3c per litre reduction in the petrol levy (collected at the pump).

Cars under 40 years old will be classified according to a safety rating and divided into four bands – the safest cars will receive the biggest reduction. The annual cost to licence a petrol car under 40 years will reduce between $42 and $132 from 1 July 2015. Non-petrol cars will save $82-$172.

Why should you care now?

A vehicle license can be renewed for up to a 12-month period, but it is possible to renew for shorter periods too. If you renew before 1 July 2015 for 12 months, you could be paying too much – up to $11 for each month beyond July 2015 for the safest petrol cars.

What should I do if my licence is coming up for renewal?

If your licence comes up for renewal between now and July 2015, only renew it for the minimum period of three months and no more. Online renewals allow you to select any monthly period for the licence, from three months upwards, and the paper renewal has a 3-month check-box. When the licence expires after this three month period, the next renewal will be charged at the new, reduced rate.

What about vintage vehicles?

Vintage cars and motorcycles aged 40 years or older are not subject to risk rating. But ACC levies for vintage vehicles will reduce by 45 percent, saving $32 for petrol vintage vehicles and $47 for non-petrol.

What if my licence expires in June? Can I delay renewing it until July?

You still need to renew the licence, but choose the minimum renewal period of three months to minimise the amount paid. If you don’t renew by the due date, not only could you be fined for driving an unlicensed vehicle, but when you renew it the ACC levies will be calculated from the date of expiry at the old rate, not the date of renewal.

Why is the motor vehicle levy reducing?

The ACC Motor Vehicle Account is fully funded – meaning there is enough money in the account to cover the ongoing cost of claims, so less needs to be collected from vehicle licensing or petrol tax.

What are vehicle risk ratings?

Light passenger vehicles under 40 years of age will be rated on how well they protect people in a crash. The ratings are derived from New Zealand and Australian crash data, or new car safety ratings. The ratings include occupant and other road-user protection, and are modified to account for safety performance related to vehicle design alone. ACC plan to fine-tune the ratings to categorise cars into four bands of safety, which will attract different ACC levies.