A rise to Vehicle Excise Duty rates – more commonly known as car tax – looks set to sting drivers with major price increases. Drivers of different vehicles will face different Vehicle Excise Duty rates.

In the Spring Budget, UK Chancellor Jeremy Hunt announced a rise in Vehicle Excise Duty rates in accordance with the Retail Price Index (RPI). This impacts both old and new vehicles, but particularly hits owners of petrol, diesel and hybrid cars purchased for over £40,000 in the past five years (1 April 2017 – 31 March 2023). This band of drivers will see their VED rates rise from £355 to £390, on top of the standard rate, which itself has risen by £15.

Petrol or diesel vehicles registered between March 2001 and March 2017 will be classified by lettered Vehicle Excise Duty bands, which are based on the CO2 emissions of vehicles. Depending on where your car is classified within these bands, you can expect to see your Vehicle Excise Duty rates rise by anywhere from £5 to £65.

Vehicles registered before March 2001 will face similar VED rate rises (between £20 and £30), depending on whether the vehicle has an engine size of up to or over 1.55 litres.

Buyers of brand-new vehicles (after 1 April 2023) can expect a similar rise in Vehicle Excise Duty rates. Fully-electric or plug-in hybrid vehicles that emit less than 50g/km CO2 are exempt, with other vehicles facing a rise of anywhere between £5 and £60, depending on the amount of CO2 the car emits.

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