New car tax changes introduced today with drivers paying more in VED rate increase

Why motorists could pay more in car tax in 2022

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Vehicle Excise Duty, also known as vehicle tax, car tax or road tax, is set to rise in line with inflation from today, April 1, 2022. VED is calculated using the vehicle’s age and CO2 emissions, with bigger, older engines usually producing more CO2, resulting in higher costs.

Car tax is made up of two payments which drivers are required to pay: standard rate and first year rate.

The first year rate is also known as a “showroom tax” and is based on the CO2 figures when the vehicle was built.

The standard rate is the annual renewal a driver will pay annually from there onwards.

The 2018 Budget outlined that new diesel vehicles registered after April 1, 2018, that do not meet the real driving emission step 2 (RDE2) standard will be charged a supplement on their first year rate to the effect of moving up by one VED band.

In addition, cars with a list price of over £40,000 when new pay an additional rate of £355 per year on top of the standard rate, for five years.

Alternative fuelled vehicles, including hybrids, bioethanol and liquid petroleum gas, pay £155 per annum, while zero emission vehicles, such as electric cars, will continue to pay £0 in VED for the first year.

Vehicles producing between 76g and 90g of CO2 emissions per km will see a first-year rate rise from £115 to £120.

Vehicles which produce over 255g of CO2 emissions per kilometre travelled will see their first-year rate rise from £2,245 to £2,365.

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Vehicle Excise Duty bands and rates for cars first registered on or after April 1 2017

If a vehicle produces CO2 emissions of 0g per km, the VED will remain at zero.

If a vehicle produces CO2 emissions of between one and 50g per km, the standard rate will increase from £155 to £165, while the first year rate will remain at £10.

If a vehicle produces CO2 emissions of between 51 and 75g per km, the standard rate will increase from £155 to £165, while the first year rate will remain at £25.

If a vehicle produces CO2 emissions of between 76 and 90g per km, the standard rate will increase from £155 to £165, while the first year rate will increase from £115 to £120.

If a vehicle produces CO2 emissions of between 91 and 100g per km, the standard rate will increase from £155 to £165, while the first year rate will increase from £140 to £150.

If a vehicle produces CO2 emissions of between 101 and 110g per km, the standard rate will increase from £155 to £165, while the first year rate will increase from £160 to £170.

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