Millions of drivers will be hit by a rise in car tax next week - and it could add as much as £65 to their annual bills.
On April 1, Vehicle and Excise Duty (VED) rates will increase in line with inflation - with motorists set to see their household expenses take another hit on the first week of the new tax year.
VED, also known as 'car tax', is an annual levy that must be paid for on vehicles driven and parked on public roads in the UK. In 2016, the Treasury pocketed £6 billion through VED.
In line with the rise next month, brand new and older cars can expect to pay more.
For most drivers, the annual cost will go up by £5. However, existing owners of older, more polluting cars will be charged up to an additional £15 per year, while some new car buyers will be hit with an extra £65 charge on first-year VED.
The only new cars that are exempt are pure electric vehicles – with no exhaust emissions.
Meanwhile, the premium tax levied on cars that cost more than £40,000 will also rise from £310 to £320 per year.
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Tax for cars registered after April 2017
The Government made the decision to revamp VED rates in April 2017.
'First year tax' (only paid the first year you buy a brand new car) now varies based on the level of CO2 emissions your car produces.
The 'standard rate tax' - paid from the second year onwards - is different. It's now a flat rate scheme for all but zero-emissions electric cars are exempt.
This flat rate is currently £140 (£130 for hybrid cars) a year.
However, as of April 1, there will be changes to both the first year rates and the standard ones.
For owners of electric and some hybrid cars, first year rates will be unchanged.
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However, those with petrol and diesel models producing more than 90 grams per kilometre of CO2 (which is most of them), the smallest increase will be £5 for the first year.
For those with high emissions cars with big thirsty engines, first year tax could rise by as much as £65.
The standard rate increase is £5 a year - increasing to £145 for petrol and diesel models and £135 for hybrids.
Last year's standard rate also came with a new premium for all cars - even electric models - with a list price of £40,000 or more.
This will rise from £310 to £320 on 1 April.
In short...
- A flat standard rate of £145 will apply to all cars except electric vehicles.
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An extra charge of £320 will apply to cars with a list price over £40,000 in the first 5 ‘standard rate years’.
Cars registered between 1 March 2001 and 31 March 2017
The amount you pay will depend on your car's CO2 emissions - you can find out which band it falls into, here .
Car tax for cars first registered before 1 March 2001
- For engines 1549cc or smaller: £160 a year
- For engines bigger than 1549cc: £265 a year
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What about very old models?
All cars built before January 1979 are exempt from VED and the new rates.
However, you do need to apply through the DVLA to register your vehicle to be free from car tax.
What if I don't use my car?
Registered vehicles that are not being used or parked on public roads must be covered by a Statutory Off Road Notification (SORN) to avoid VED.
You can apply for this, here .
