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Vehicle Tax Changes: What You Need to Know

23 May 2022

If you drive anything other than an all-electric vehicle, it probably won’t surprise you to know that this year’s vehicle excise duty (VED) has gone up. In this article, we’ll explain how much you have to pay, how VED is calculated, and the changes to Benefit in Kind (BiK) tax rates. 

How much is car tax for 2022/23?

Nothing’s getting any cheaper at the moment with the cost of living crisis sending prices spiralling, and unfortunately, vehicle excise duty is going the same way. Known more simply as car tax, road tax or vehicle tax, the new car tax rates for 2022-2023 were announced as part of the Spring Budget. And the news from Rishi Sunak is that the standard rate of road tax for cars is on the up, with road tax for vehicles registered after 2017 rising by 6%, from £155 to £165.

As well as the standard rate (that’s the rate you pay after the first year of registering the vehicle), the rates have also increased for the first year of road tax for most other vehicles. However, some low polluting vehicles, those producing 0-75g/km of CO2, will pay the same as they did in 2021-2022. 

As an example, owners of cars producing CO2 emissions of 171-190g/km will now pay £945 (up from £895) for their first year of road tax, while those with cars that produce 191-225 g/km must now pay £1,420 (up from £1,335), an increase of £85 on last year. 

Vehicle tax rates for cars registered on or after 1 April 2017

Below are the road tax rates for cars registered on or after 1 April 2017.

CO2 emissions 

First year rate

Standard rate

0g/km

£0

£0

1 - 50g/km

£10

£165

51 - 75g/km

£25

£165

76 - 90g/km

£120

£165

91 - 100g/km

£150

£165

101 - 110g/km

£170

£165

111 - 130g/km

£190

£165

131 - 150g/km

£230

£165

151 - 170g/km

£585

£165

171 - 190g/km

£945

£165

191 - 225g/km

£1420

£165

226 - 255g/km

£2015

£165

Over 255g/km

£2365

£165

As announced in the Spring Budget 2018, owners of cars with a list price of over £40,000 when new also pay an additional rate on top of the standard rate for the first five years after the vehicle’s registration. This has risen to £355 for 2022-2023, up from £335 last year. 

Vehicle tax rates for cars registered on or after 1 March 2001

It won’t surprise you to know that road tax has also risen for vehicles registered between 1 March 2001 and 31 March 2017. The rate of vehicle tax charged on these older vehicles is based on their band, which is determined by their fuel type and CO2 emissions. You can easily find out what tax band a new or used vehicle is in and how much the road tax will cost at the time of checking. 

This is the standard rate of vehicle tax you will now pay:

  • Band A - £0 (remain the same)
  • Band B - £20 (remain the same)
  • Band C - £30 (remain the same)
  • Band D - £135 (up from £130)Increase from £130 to £135
  • Band E - £165 (up from £155)
  • Band F - £180 (up from £170)
  • Band G - £220 (up from £210)
  • Band H - £265 (up from £250)
  • Band I - £290 (up from £275)
  • Band J - £330 (up from £315)
  • Band K - £360 (up from £340)
  • Band L - £615 (up from £585)
  • Band M - £630 (up from £600)

Vehicle tax rates for cars registered before 2001

2001 is more than 20 years ago now but there are still plenty of classic cars and old bangers that were registered before this time. The road tax has risen on these older vehicles, too, with the amount you have to pay determined by the vehicle’s engine size.

Engine size of 1549cc and below - £180 (up from £170) 

Engine size above 1549cc - £295 (up from £280)

Do I have to pay road tax in 2022?

It’s highly likely that you do. However, there are a few exceptions that could make you exempt from vehicle excise duty.

  • Fully electric vehicles are exempt from road tax altogether (as long as they have a list price of less than £40,000). You also stand to make a big saving on the cost of fuel, but it’s important to check the charging infrastructure in your area before you make the switch. 
  • If your car is more than 40 years old and was registered before 1 January 1982, it is exempt from road tax. However, you do have to apply for an exemption rather than just cruising around in your old classic and assuming you’ll be okay. You can apply for an exemption here.     
  • Some drivers with disabilities can register as being exempt from vehicle excise duty. Find more information on exemptions here.  

Benefit in Kind (BiK) rates are also on the rise

Guess what? You’ll also pay more in Benefit in Kind tax if you drive a company car. The rates are due to rise by 1% from April 2022. Electric vehicles and other company cars producing CO2 of less than 50g/km will now pay 2% BIK instead of 1%. Drivers of all other vehicles will pay 1% more than they did in 2021/22, except those who drive company vehicles that produce over 156g/km. Their BiK rate will remain at 37%

There is a cut in fuel duty

Hallelujah. Amid all these rises, there is something that’s due to get cheaper, well, sort of. Rishi Sunak has cut tax on fuel by 5p per litre. However, with the sky-high fuel prices we’re seeing at the moment, that reduction could easily be wiped out by more price hikes on the forecourts. 

Want to reduce your vehicle tax?

Then take a look at our quality range of used cars and vans. With more than 250 vehicles in stock and low tax models such as Ford Fiestas, Volkswagen Polos, Citroen C1s and Nissan Leafs, you’re sure to find an economical solution to fit your lifestyle and budget.

 

 

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