With the dawn of the new financial year on April 1, motorists across the UK are bracing for the upcoming adjustments in car tax rates, as confirmed by Chancellor Jeremy Hunt. These modifications, aligning with the retail price index (RPI), are anticipated to influence the majority of British drivers.
The Forthcoming Shift in Vehicle Excise Duty
In the Autumn Statement of 2023, it was disclosed that Vehicle Excise Duty (VED) rates would undergo adjustments in accordance with RPI, effective from April 1, 2024. This revelation has set the stage for an escalation in car tax expenses for countless drivers, although the increase is projected to be less severe than initially feared due to a subsequent decline in RPI rates.
Industry specialists, including Pete Barden, suggest that for cars registered on or after April 1, 2017, the standard VED rate is expected to climb from £180 to approximately £190 for the majority of vehicles powered by internal combustion engines. This uptick is mirrored in the first-year rate for cars with pre-April 2017 registrations, which varies based on the vehicle’s emissions output.
Emphasis on Emissions: The Environmental Perspective
The adjustment in tax rates is notably more pronounced for vehicles emitting over 255 grams of CO2 per kilometre, earmarked for the steepest increases. According to Barden’s projections, such vehicles could encounter a first-year rate surge from £2,605 to £2,745. Additionally, vehicles emitting between 191-225g/km and 226-255g/km of CO2 are poised for significant tax increases, underscoring the government’s intent to discourage the use of high-emission vehicles.
Conversely, vehicles with emissions below 76g/km will face more modest hikes, with the initial band rising from £130 to £135. Older vehicles, registered between March 1, 2001, and March 31, 2017, are not exempt from these increases, with the most pollutive in Band M expected to see an annual increase from £695 to £735.
While the final rates for April have yet to be confirmed by HMRC, it’s clear that the majority of petrol and diesel drivers should prepare for heightened expenses. In contrast, electric vehicles (EVs) continue to enjoy an exemption from VED until April 2025, part of Chancellor Hunt’s strategy to foster a balanced and equitable motoring tax system.
Special Considerations for Commercial Drivers
In a move to shield some sectors from the fiscal impact, the government’s Autumn Budget promised relief for lorry and truck operators, maintaining VED and the HGV levy at the 2023-24 rates for the subsequent financial year. This decision reflects an acknowledgement of the critical role these vehicles play in the UK’s economy and the importance of supporting this sector amidst broader tax increases.
As Quality Used Motors keeps a vigilant eye on these developments, drivers are encouraged to stay informed about the upcoming changes to ensure they navigate the financial year ahead with full awareness of their tax obligations.
