The New Car Tax and How it Might Affect You
The government in the UK aspires to reach carbon neutrality by 2050, having put this ambition into law in 2019. As you might expect, it’s pulling every available lever to achieve this aim.
It’s partly for this reason that an increase in Vehicle Excise Duty is imminent. Petrol and Diesel drivers look set to pay the most, with some vehicles set for a penalty in excess of £125. The idea here is that motorists who were considering a new car might be persuaded to make it a battery-electric or a hybrid vehicle.
These changes are being implemented ahead of a proposed ban on the sale of new petrol and diesel cars, which is set to come into force in 2030.
What is VED?
Vehicle Excise Duty is a more formal term for road tax. It’s a tax that must be paid before a vehicle is legally allowed to be driven on public roads in the UK. It’s been around since 2001, and is there to incentivise greener modes of transport. Different models of vehicle are charged at different rates.
How are rates calculated?
In April 2020, a change was brought in which effects the way that VED rates are calculated. Rather than using NEDC emissions testing, the Ministry of Transport now favours a WLTP system, which is thought to be more accurate.
The net effect of the change, however, was that many vehicles were pushed up an emissions band, and that the total amount of road tax collected went up. Another change saw benefit-in-kind car tax being taken away from electric vehicles. This change was put in place to persuade fleet managers to make the switch to electric vehicles.
Which Cars will be most affected?
As you might expect, it’s larger petrol and diesel vehicles that will bear the brunt of the changes. Specifically, rates for vehicles emitting more than 255gm/km of CO2 will go up by around £120, to £2,365 for the year. We’ll see rises of £105 for cars producing more than 226gm/km, and £75 for cars producing more than 191.
What does this mean for motorists?
If you’re in the market for a new car, then these changes might just persuade motorists to shift toward a greener alternative when choosing their car. This might counteract the premium you might currently pay on a new hybrid or electric vehicle. Combined with the rollout of clean air zones in city centres across the UK, and the fast-evolving technology that goes into the electric car, the case for making the switch is getting more compelling – though critics might argue that the authorities are favouring the stick approach, and that motorists are being punished unfairly.
The Insidexpress is now on Telegram and Google News. Join us on Telegram and Google News, and stay updated.
