VED rise hits car owners from April

The rate motorists pay for car tax is set to increase from April this year as part of the government’s plan to pay for the cost of future road repairs and upgrades through taxes on motorists.

UK Government now links vehicle excise duty (VED) to inflation via the Retail Price Index (RPI) inflation measure. Chancellor Philip Hammond confirmed in his 2018 Budget that this would apply to all cars, not just new ones. As a result, owners of brand new and older cars can expect to pay from £5 to £15 more, depending on how polluting the car is. Buyers of some brand new cars will pay an additional £65 for the first-year tax rate.


How much will you pay?

As in the past, VED costs will depend on the age of your car and its CO2 emissions (unless it was registered before March 2001).

Cars registered on or after 1 April 2017

Cars registered on or after 1 April 2017 will pay £5 more standard annual rate. Owners of zero-emission vehicles will continue to get free tax, and those with hybrid cares continue to receive £10 discount.

Cars registered between 1 March 2001 and 31 March 2017

Cars registered between 1 March 2001 and 31 March 2017 will have different rates depending on their CO2 emissions, with the most polluting hit with a £15 rise.

New cars from 1 April 2019

Those buying brand new cars will be hit with two additional rises. The first year of a car’s tax is based on CO2 emissions, ranging from £0 for zero emissions electric vehicles, to £2,070 for the most pollution combustion engines.

First-year rate is also rising from April. Vehicles emitting 90g/km or less are unaffected while more polluting cars will see between £10 and £65 added to their first-year rate. As a result vehicles emitting more than 255g/km will cost £2,135 in its first year.

Any diesel car that doesn’t comply with the RDE2 emissions standards (set to become mandatory in January 2020) will be moved up a tax band. Plus, cars with a list price of £40,000 or over will be subject to increased ‘premium tax’, payable from years two and six, rising from £310 per year to £320 per year.

Pre-March 2001

VED for cars registered before March 2001 will be calculated by engine size. Although not referred to in government documents, an increase in line with RPI would mean a £5 increase for cars under 1,549cc and £8 increase for those over 1,549cc.

Exemptions from VED:

  • Cars over 40 years old

  • Cars with zero emissions

  • Cars registered between March 2001 – 2017 with emissions less than 100g/km

You still have to renew your car’s tax or declare it off-road (by filing a Statutory Off Road Notification, or SORN) each year even if it is exempt from VED, otherwise you face a fine of up to £1,000. Research last year revealed that more than 71,000 people failed to tax their zero-rated cars over the previous three years, with more than £1.1 million in fines being issued as a result.


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