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From April the rate drivers pay for car tax is set to increase. The rise in Vehicle Excise Duty (VED) – to give it its correct name – has been prompted by the Government choosing to link the tax to the retail price index (RPI) inflation measure. In 2017 the Government said tax would track RPI and in his 2018 Budget Chancellor Philip Hammond confirmed that this would apply to all cars, not just newly registered ones. As a result, owners of brand new and older cars can expect to pay more, with the rises ranging from £5 to £15 depending on how polluting a car is. Buyers of some brand new cars will also pay up to an additional £65 for the first-year tax rate.
How much will you pay? How much extra you pay will depend on the age of your car and its CO2 emissions (unless it was registered before March 2001). For cars first registered on or after April 1, 2017, the standard annual rate will rise by £5 to £145. Owners of zero-emission vehicles will continue to get free tax and those with hybrid cars will continue to receive a £10 discount.
For cars registered between March 1 2001 and March 31 2017, the rises are different. The least polluting cars – up to 120g/km wonât see any increase while the most polluting will be hit with a £15 rise.
First-year rates Buyers of brand new cars are also being affected by two additional rises. The first year of a car’s tax is calculated based on its CO2 emissions, currently ranging from £0 for zero-emissions electric cars to £2,070 for the most pollution combustion engines. From April, this first-year rate is also rising. Cars emitting 90g/km or less are unaffected while those up to 150g/km will see an extra £5 added. More polluting cars will see between £10 and £65 added to their first-year rate, meaning a car emitting more than 255g/km will cost £2,135 in its first year.
On top of that, any diesel car that does not comply with the RDE2 emissions standard – that is most of them – is automatically moved up one tax band. Cars with a list price of more than £40,000 will also be subject to a “premium tax”, which is paid in years two to six, rise from £310 per year to £320.
Older cars If your car was registered before March 2001 its VED is calculated by engine size. Government documents don’t mention these vehicles in the latest tables but an increase in line with RPI would mean a £5 rise for cars under 1,549cc – to £160 – and £8 for those over 1,549cc – to £263. Exemptions Cars more than 40 years old, those with zero emissions and any car registered between March 2001 and 2017 with emissions of less than 100g/km are all exempt from VED. However, you still have to renew your carâs tax or declare it off-road each year otherwise you could be fined.
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