DRIVERS are being hit with a tax increase from today, but one million Brits won’t have to pay for it as they are exempt.
The budget back in March announced an increase to the car tax, otherwise known as the Vehicle Excise Duty.
The hike is based on the Retail Price Index of 10.1%, but the increase to your wallet will depend on your vehicle and when it was registered.
To work out an approximate for the increase, take your existing bill, multiply it by 10.1 and then divide by 100.
Electric vehicles are exempt from the tax until 2025.
RAC believes there are currently 1million battery powered electric motors on the UK’s roads.
certain cars will be hit much harder than others with luxury motors being at the top of the list – and some could pay up to £600 a year.
Tax expert Andy Wood, of Tax Natives, provided a further breakdown of what these extra costs could look like.
He said: “The impending rise in VED rates will substantially impact drivers of petrol, diesel, and hybrid vehicles across the UK.
“Individuals relying on traditional fuel types may need to allocate additional funds to their vehicle taxes, potentially amounting to hundreds of pounds.
“Vehicle taxation costs vary based on age and environmental impact.”
Bradley Post, Managing Director of finance experts RIFT warned the more expensive your car is the higher the tax could be.
He told Express.co.uk: “The average motorist can expect to see a six percent rise which will cost them roughly £10 more per year.
“However, for those whose cars are classed as luxury and subject to the ‘luxury car’ surcharge, this cost is likely to rise to over £400, which will see them pay as much as £600 a year in road tax.”
The UK operates three systems of VED, depending on when your vehicle was registered.
The newest system – introduced in 2017 – is then split into two further rates.
One for your first year on the road based on emissions and then a second based on the cost of the car after the first 12 months.
Higher polluting motors could see the first-year rate rise up to £2,745 – a sizeable increase of £140 on last year.
The second rate is set to remain the same, with a flat rate of £190 (or £180 for “alternative fuel vehicles”).
Motors registered between 2001 and 2017 are taxed based purely on emissions.
From April, the most polluting cars will see their rate rise from £695 to £735, while lower bands could see a spike of between £20 and £35.
Then, for cars registered before 2001, the tax is based on engine size.
Cars under 1549cc will now be charged a flat rate of £200, while larger engines will incur a £325 payment.
Fortunately, there are five key exemptions which could see thousands of Brits pay no tax at all.
Other tax changes
Increased income tax for wealthy: The chancellor announced the amount where the 45 per cent rate kicks in is being lowered to £125,140 from £150,000 on April 6.
Child benefit increase: Child benefit payments are rising in line with inflation – 10.1% on April 10.
National Insurance freeze: An increase in the NI threshold has been frozen to April 2028, meaning as your income increases over £12,570 you will earn more money.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
