Cost increase linked to inflation
Back in 2017, the Chancellor laid out the government’s plans to link future rises in Vehicle Excise Duty (VED) to the rate of inflation. So, although the recent tax hike shouldn’t come as a surprise to anyone, it’s likely to have escaped the attention of many motorists. And while the increases aren’t as large as in previous years, some drivers have been hit harder than others. The majority of motorists face a £5 increase in annual road tax. Owners of older, heavier polluting cars will pay an additional £15 a year, while some new car buyers face an extra £65 cost.
The tax rate for vehicles registered before 1 March 2001 is based on engine size. Cars with an engine under 1550cc attract an increase of £5/year, while cars with larger engines attract a £15/year increase. For cars registered between March 2001 and March 2017, the new tax rate will depend on the vehicle’s fuel type and volume of CO2 emissions. Cars emitting less than 121 g/km of CO2 escape any tax rise, while owners of higher emission cars will pay between £5 and £15 more per year.
Cars registered April 2017 - March 2019
For cars registered between 1 April 2017 and 31 March 2019, VED varies according to fuel type and the vehicle’s list price when purchased. If your vehicle had a list price higher than £40,000, you’ll have to pay a higher VED rate for the first 5 years of its life.
|Fuel type||Purchase price under £40,000||Purchase price £40,000+|
|Petrol or diesel||£145 (up £5)||£465 (up £15)|
|Electric||£0||£320 (up £10)|
|Alternative||£135 (up £5)||£455 (up £15)|
New cars registered after 1st April 2019
The tax rate levied on new cars registered since April this year is based on fuel type and the level of emissions. And if you’ve bought a diesel, the cost will also depend on whether it conforms to the latest ‘RDE2’ standards. RDE2 stands for Real Diesel Emissions 2, and it’s a new the environmental standard which is designed to encourage manufacturers to build, and drivers to buy, cars with lower-polluting engines.
Full details of all new car tax rates are available here