Changes to Road Tax
Posted on 23rd June 2022 at 12:45
As with many everyday costs at the moment, the price of road tax has gone up in line with Rishi Sunak’s recent announcement. This actually took effect in April but we’ve had a lot of clients ask us for more details, so we’ve rounded up all of the key points below.
What is road tax?
The official name is Vehicle Excise Duty, or VED, but most people call it car tax or road tax. This kind of tax is enforced by DVLA to anyone who owns a vehicle that’s driven or even just parked on public roads (it doesn’t apply to vehicles that are continually stored on private land). Failing to pay road tax comes with a fine of up to £1,000, so it’s essential that you never miss an annual payment.
Is road tax the same amount for everyone?
There are multiple factors that determine how much road tax you will pay on your vehicle. These factors include:
Year of registration
Value of the vehicle
A one-off rate is charged in a vehicle’s first year, followed by a flat annual rate in each subsequent year
How has road tax changed?
Road tax varies in a similar way to many other types of tax. This means that it can go up or down depending on how the UK economy is performing and the Government’s environmental targets. In his Spring Statement, Rishi Sunak announced that there would be new road tax rates for 2022-23, which came into effect in April this year.
The standard rate of road tax for cars registered after 2017 has increased by 6%, which means that the annual fee for many vehicle owners rose from £155 to £165.
The largest change is to first-year road tax for cars that emit a lot of CO2, ranging from £120 (for cars producing 76-90g/km) to £585 (151-170g/km). If you have a larger car that emits 171-190g/km, the price of road tax has leapt from £895 to £945, while cars that produce 191-225g/km have gone up from £1,335 to £1420.
For those with even larger cars, it’s £,2015 a year in the first year if it produces CO2 emissions of 226-255g/km, and those in the 255+g/km group now pay £2,365 of first-year road tax, which is £120 higher than before.
How can I reduce my road tax?
Whilst driving less often will cut down your petrol bill, it won’t make a difference to your road tax. The best way to significantly reduce the amount you owe in road tax is to drive a hybrid or fully electric vehicle. If you drive a car that limits emissions to 0-75g/km of CO2, the amount of road tax will only up to £25 a year and possible even zero.
We can help you cut down your tax
Tagged as: Tax
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