Jack Dreyer | Wednesday 13th July 2022 8:00am
Are you familiar with vehicle excise duty? Well, though you may not realise it, you most definitely are. Vehicle Excise Duty, or VED, is just another name for car tax, or ‘road tax’ - something we all have to pay on an annual basis to keep our cars legal on the roads.
This yearly payment, however, is set to rise this year. But why? In line with inflation, Vehicle Excise Duty has gone up from April 2022. As such, the cost of owning a petrol or diesel vehicle will rise significantly.
Read on to find out more.
How is VED calculated?
Vehicle Excise Duty is calculated using the following two factors:
- A vehicle’s age
- A vehicle’s total CO2 emissions (These are measured using WLTP standards)
As it stands, bigger, older engines tend to produce more CO2, requiring drivers to pay more tax on them.
A new car’s tax cost can range anywhere from £0 to £2,365 in the first year, depending on its CO2 emissions. All cars then move to a flat annual rate for the second year onwards.
For drivers of petrol and diesel cars registered after 1 April 2017, that flat annual rate is currently £165, and for alternatively fuelled cars (hybrid, bioethanol or LPG) the rate is £155. For cars with a list price of £40,000 or more, an extra £335 tax is applied for the first five years. Drivers of cars producing zero emissions - such as electric and hydrogen cars - don’t have to pay car tax, even if the list price is more than £40,000.
So, in summary, the amount of VED you pay depends on how old your car is, and how environmentally friendly it is. Use the following statements to help you work out your VED payment following the price hike:
- Vehicles producing over 255g of CO2 emissions per km travelled will see their first-year rate rise from £2,245 to £2,365.
- Vehicles producing between 226g and 255g per km travelled will see increases from £1,910 to £2,015.
- Vehicles producing lower CO2 emissions, or none at all, will fare better:
- Vehicles producing between 76g and 90g of CO2 emissions per km will see a first-year rate rise from £115 to £120.
Does everyone have to pay VED?
While it is an all-consuming tax, and a legal requirement, not everyone has to pay it. Zero emission vehicles, including electric cars, will continue to pay £0 in VED for the first year.
As well as this, there are a series of exemptions, including (but not limited to):
- Cars registered between March 1st 2001 and March 31st 2017 with CO2 emissions of 100g/km or less. (You can find this out if you check your V5C registration certificate or look online at GOV.UK).
- Cars 40 years old or older.
- Drivers with disabilities, provided they meet the necessary criteria.
- Vehicles that are never driven
Make sure you check regulations carefully before deciding not to pay road tax, or you could find yourself incurring fines, court action, or even getting your car clamped.
Keep you car roadworthy with Kwik Fit
While it’s all well and good paying your road tax, if your vehicle is not maintained properly, it might not even be road worthy in the first place.
When it comes to keeping your car safe, legal, and roadworthy, nothing is more important than a regular service schedule. Book in for an MOT and service at your local Kwik Fit centre today. Or, contact us with any questions you may have.
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