Martin Lewis gives money-saving advice on VED car tax
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In Spring 2022, changes to Vehicle Excise Duty, (also known as car tax), could cost motorists an extra £130 a year. In a bid to curb UK emissions, this car tax will rise if your car is considered to be among the highest polluters on the road. This means the more emissions that your vehicle produces, the higher your tax bill will be. Here’s how to work out which band of tax your car will fall under.
Chancellor Rishi Sunak announced in his Autumn Budget that car tax would increase from April 1, 2022.
Mr Sunak also announced new Benefit in Kind changes and Clean Air Zones will also be introduced, this will create further fees for some road users.
Vehicle Excise Duty (VED) will be increased in line with the Retail Price Index, which is typically used as a measure of inflation.
VED is paid on vehicle ownership and tax bands depend on the type of vehicle and first registration date.
VED rates have increased in line with inflation since 2010.
How to work out your new VED band
VED comprises two parts. You will have to pay a one-off first-year rate in the 12 months from when your vehicle is initially registered.
After this period, you’ll pay a standard rate. For vehicles registered on or after April 1, 2017, this is currently £155, but it will rise to £165 from April 1, 2022.
Vehicles with a list price of over £40,000 when new will be required to pay an additional £355 annually on top of the standard rate for five years.
Your first payment of VED will depend on the amount of CO2 emissions your vehicle produces.
In a bid to encourage more Brits to switch to less polluting vehicles, those that emit zero grams per kilometre of CO2 will be exempt from paying VED.
This means drivers of electric cars won’t have to pay car tax.
However, diesel, petrol and alternative fuel-powered vehicles will fall into a VED tax band.
The lowest band of tax will be for those vehicles that produce between one and 50g per km.
From April 1, these drivers will pay £10 for the first 12 months.
Vehicles that emit between 51 and 75g per km will pay £25 for the first year.
Those that produce between 76 and 90g per km will see a first-year rate rise of just £5 rising to £120 from April 2022.
If your vehicle produces emissions between 101 and 110g per km then your first-year rate will increase from £160 to £170.
A vehicle that produces between 111 and 130g per km will pay £190 for its first year.
If your vehicle produces emissions between 131 and 150g per km then your first-year rate will increase from £220 to £230.
Vehicles that produce 151 to 170g per km will pay a first-year rate of £585.
If your vehicle produces emissions between 171 and 190g per km then your first-year rate will increase from £895 to £945.
A vehicle that creates emissions of between 191 and 225g per km will pay a first-year rate of £1420 from April 2022.
Vehicles producing between 226 and 255g per km will see their VED rates rise from £1,910 to £2,015.
Those cars that emit more than 255g per kilometre of CO2 will pay a staggering £2,365.
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