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Electric vehicles

Car Tax Hike Hits Millions of UK Motorists

Strategic Insights

— 2 min read

Car tax rates have increased significantly on April 1, 2023, as part of the UK government's annual vehicle excise duty (VED) changes. Millions of UK motorists will be impacted by the new rates, with some expecting a major financial shock. According to the AA, those with older, eco-friendlier cars may face a sudden and steep increase in their car tax bills, with some hikes reaching as high as £150 or more per year. The existing pressure on vehicle owners' purses is further exacerbated by the already hefty annual fuel duties, with the average car currently paying £436.84 in fuel duty a year, plus VAT.

Key Takeaways:

  • The AA warns that the VED changes and future increases threaten a major financial shock to the finances of millions of car owners.
  • Cars registered between March 1, 2001, to March 31, 2017, are taxed based on their CO2 emissions, while cars registered on or after April 1, 2017, pay a first-year figure according to their emissions, followed by a flat rate.
  • The CO2 emission-based VED rates for the 2001-2017 system will see a significant decrease, leading to a potential hike of £150 or more per year for owners of older, eco-friendlier cars.
  • The average car pays £436.84 in fuel duty a year, plus VAT, before the new tax rise.
  • Government data reveals that 58% of UK motorists are subject to the older vehicle VED scheme.
  • Motorists can use WeBuyAnyCar's free online number plate checker to quickly find out their vehicle's engine size, power, and CO2 emissions and calculate their VED payments.
  • The AA's breakdown expert, Jack Cousens, noted that the new tax rate changes may be a 34% increase on top of the fuel duty, which is "a major financial blow" for many drivers.

Statistics:

  • 58% of UK motorists are subject to the older vehicle VED scheme based on CO2 emissions.
  • The average car pays £436.84 in fuel duty a year, plus VAT.
  • The new VED rates for cars emitting between 1-50g/km of CO2 have increased from £10 to £110 for 2023-24.
  • The new VED rate for cars emitting 51-75g/km of CO2 has increased from £30 to £130.
  • The biggest price hike is for owners of vehicles that emit 76g/km of CO2 and above, which will see a price increase from £135 to £270.
  • Brits who buy the most polluting petrol and diesel cars over 255g/km now need to pay £5,490, up from £2,745 before.

Sources:

  • "VED changes and future increases threaten a major financial shock to the finances of millions of car owners" - The AA, citing Jack Cousens
  • WeBuyAnyCar's free online number plate checker
  • Government data on vehicle excise duty (VED) rates
  • "Fuel duty a year - or £524.21 when VAT is added at the pump" - The AA, citing Jack Cousens
  • "A major financial blow" - The AA, citing Jack Cousens

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