Hikes to car tax rates from 1 April reveal huge stings for drivers
While Chancellor Jeremy Hunt spared motorists a huge rise in fuel duty in-line with inflation in his Spring Budget, he refused to put a freeze on the cost of Vehicle Excise Duty (VED) – or car tax – from 1 April 2023.
The Budget document last month revealed that the government will ‘uprate VED rates for cars, vans and motorcycles in line with RPI’ – and with the Retail Price Index at 10.1 per cent, this translates to some major price increases for drivers.
And most car owners can expect to be stung by these hikes, including those with petrol, diesel and hybrid vehicles bought new in the last five years for more than £40,000 who will be hit with a massive increase in annual costs.
How do the new VED rises impact you? We have detailed all the changes based on the age of the car you drive…
How will car tax hikes impact you in 2023? Find out how much extra – if any – in Vehicle Excise Duty you’ll be paying on your motor this year
I AM BUYING A BRAND NEW CAR REGISTERED AFTER 1 APRIL 2023
When motorists buy a new car, they are stung with a first year tax rate – also known as a ‘showroom tax rate’ – based on the CO2 emissions of the vehicle they purchase.
After this first year showroom tax, owners will then have to pay a fixed-price standard tax rate (which you can find in the next section below).
The impact of the latest RPI hike has increased VED for every car buyer bar those purchasing fully-electric and plug-in hybrids vehicles that emit less than 50g/km CO2.
And some of the increases drivers will experience are significant.
For buyers of the latest petrol and diesel cars with carbon emissions up to 150g/km, they can expect pay between £5 and £60 more than they would have done before 1 April.
Anyone buying a new motor with CO2 emission above 150g/km will be forced to pay an extra £60 to £240, with the most polluting models clobbered by a first-year showroom tax rate of £2,605.
If you drive a diesel car that fails to meet the Real Driving Emissions 2 (RDE2) standards for nitrogen oxide emissions, there is a supplementary charge. You can ask your car’s manufacturer if your car meets the RDE2 standard, though the Gov.uk payment website will automatically identify this and apply the additional charge.
|Emissions (g/km) CO2||Petrol cars and diesel cars (TC49) that meet the RDE2 standard||Annual increase||All other diesel cars (TC49)||Annual increase||Alternative fuel cars (TC59)||Annual increase|
I OWN A CAR REGISTERED BETWEEN 1 APRIL 2017 AND 31 MARCH 2023
If you own a car that was first registered between 1 April 2017 to 31 March 2023, the RPI hike will also translate to an increase in standard rate car tax, which is paid from the car’s second year onwards.
This has been upped by £15, rising from £165 to £180 for petrol and diesel models and increasing from £155 to £170 for ‘alternative fuel vehicles’ (hybrids and plug-in hybrids).
The standard rate of VED for zero-emission electric vehicles bought during this period is wavered, but EVs will face taxation from 2025 under new rules proposed by Mr Hunt last year.
As well as increasing the standard rate for vehicles with a combustion engine, there has also been a hike to the additional ‘premium’ rate tax on all models purchased after 1 April 2017.
This premium rate impacts all cars that cost more than £40,000 when they were new and is paid on top of the standard rate for five years (from year two to year six).
Motorists who spend over £40,000 on a new car are stung with an additional premium tax that impacts the amount of VED the pay for the first 5 years at the standard rate – this year, the cost of this premium tax has risen by £35
This premium tax was introduced in 2017 and has proven to be an unwelcome hit to the pockets of motorists purchasing larger models, particularly expensive SUVs.
For those drivers who bought a £40,000-plus car new after April 2017, they will be paying the premium rate on top of the standard rate from April 2018 to April 2022.
The cost of this ‘expensive car’ tax has risen from £355 last year to whopping £390 from 1 April 2022.
That means if you drive a post April 2017 petrol or diesel car with a ‘list price’ (the published price before any discounts) of more than £40,000, you’ll be forking out a whopping £570 in standard rate tax this year, irrelevant of if it produces low CO2 or extremely high levels of carbon dioxide.
Hybrid owners get a £10-a-year discount, meaning owners of £40k-plus models registered after 1 April 2017 will have to pay £560 this year.
Electric car owners are currently exempt from this premium taxation for now, but likely won’t be from 2025 when EV owners are also forced to pay annual VED.
|Fuel type||Standard tax rate for cars costing less than £40,000||Annual increase||Standard tax rate for cars costing more than £40,000||Annual increase|
|Petrol or diesel||£180||£15||£570||£50|
|Alternative fuel (hybrid)||£170||£15||£560||£50|
|*models with a ‘list price’ (the published price before any discounts) of more than £40,000 to pay an additional premium tax of £390 for the first 5 years of the standard rate|
From 1 April 2023, drivers of vehicles registered over five years ago can expect to have to pay an extra £5 to £65 a year in car taxation
I OWN A CAR REGISTERED BETWEEN 1 MARCH 2001 AND 31 MARCH 2017
For older petrol and diesel cars registered between March 2001 and March 2017, your vehicle will continue to be classified by lettered VED bands based on CO2 emission outputs.
The impact of the the latest RPI increase from 1 April impacts all cars in this age bracket with CO2 emissions in excess of 111g/km CO2.
Annual VED costs will rise between £5 and £65.
It means the most polluting models with CO2 emissions over 255g/km will be forced to splash out £695 annually on car tax.
|VED Band||CO2 emissions (g/km)||Standard rate* for petrol and diesel cars||Annual increase||Standard rate* for alternative fuel vehicles||Annual increase|
|A||Up to 100||£0||£0||£0||£0|
|**Includes cars emitting over 225 g/km registered before March 23, 2006|
I OWN A CAR REGISTERED BEFORE 1 MARCH 2001
If you own a car that’s more than 22 years old – registered before 1 March 2001 – you will also need to pay more in car tax this year.
VED for cars this old is split into just two bands based on engine size – up to 1.55 litres and over 1.55 litres.
For those in the lower group, the rise is £20 a year, up from £180 to £200. For the larger engine capacities, ministers have hit them with a £30 increase, rising from £295 to £325 from 1 April 2023.
|Engine size||Standard rate* for petrol and diesel cars||Annual increase|
|Up to 1549cc||£200||£20|
I OWN A CAR THAT’S OVER 40 YEARS OLD
Under VED rules, any car that was registered over 40 years ago is no longer hit with car tax.
That means all cars registered before April 1983 is already eligible for ‘historical vehicle taxation’ exemption.
However, it is important to note that it is a vehicle keeper’s responsibility to apply to the DVLA for a vehicle tax exemption so they can issue an updated log book to clarify that the car is eligible for charge-free historic vehicle tax.
You can find how to apply for historic vehicle tax on the Gov.uk site.
CARS & MOTORING: ON TEST
- This Q8 is just great: We take Audi’s new Sportback e-tron for a spin
- Enter the Dragon! BYD Atto EV is the Chinese company’s first UK model
- Ferrari’s first four-door family car: New £313,000 Purosangue driven
- Thrills without frills: £31,000 MG5 is one of the cheapest family EVs
- Renault’s Arkana ticks all the boxes for what car-buying Britons want
- Can Peugeot’s chic 408 hybrid crossover be a hit in the UK? We test it
- We drive the Civic Type R – the rebellious bad boy in Honda’s line-up
- Rolls Royce Spectre: What’s it lke to drive the first ELECTRIC Roller?
- Ineos Grenadier driven: Sir Jim Ratcliffe’s £69,000 Defender
- Can you really live with a tiny Citroen Ami? Seven tasks in seven days
- Don’t supersize me! Is the ‘smaller’ Volvo XC60 all the SUV you need?
- We pamper some passengers in the new £211k Bentley Bentayga
- New kind of Buzz! VW’s electric MPV still feels like a hippy campervan
- A car for all seasons: A 600-mile round trip in Peugeot’s 3008 GT PHEV
- Feline fun: Funky Cat is the new pure-electric car from China’s Ora
- Skoda’s zero-emission hero: The Enyaq IV vRS is its hot electric SUV
- Toyota’s modern marvel: GR86 sports coupe is here – and it’s brilliant
- Perfect for energy blackouts: Kia’s new Niro EV can power your freezer
- The brand new car with 7 seats for £16,645! Dacia Jogger tested
- Retro bus: We put VW’s new ID Buzz van though its paces on UK roads
- Want a family electric car that won’t cost the earth? £24k MG4 EV test
- The new 11th generation of the Honda Civic hits the market
- French fancy: Sleek Peugeot 308 SW estate attracts admiring glances
- Vauxhall reaches for the stars with the latest Astra: We’ve driven it
- Cool ride: We test the new Citroen C5X on the hottest day of the year
- Choices, choices – there’s three types of Kia Niro – we test the PHEV
- Pininfarina’s £2m Battista accelerates quicker than a fighter jet
- Grand Juke of torque: Nissan’s new British-built hybrid compact SUV
- A supercar with ultra-green credentials: Hybrid McLaren Artura test
- Subaru’s cautious comeback: We test the new all-wheel drive Outback
- Sporty Cupra Born offers a taste of Spain. We drive the electric hatch
- Driving the fastest luxury SUV on the planet: Aston Martin DBX 707
- Royal Range Rover hits the road: We test the new £100k luxury SUV
- We go to the Arctic Circle to test the £400k Rolls-Royce Spectre EV
- BMW goes snap-happy: 2 Series Active Tourer has onboard selfie camera
- It might be red but Ferrari’s 296 GTB is a definitely a green supercar
- Test of a pre-production VW ID Buzz ahead of electric camper’s debut
- Sir Jim Ratcliffe’s off-roader DRIVEN: We test the new Ineos Grenadier
- Dacia Duster cuts a dash: We drive the new no-frills family SUV
- Is the Vauxhall Corsa really better than a Ford Fiesta? We test one
- In the week Kia tops UK sales charts, we try its all-new Sportage SUV
- Genesis will rock you! New GV70 Shooting Brake hits the right notes
- Absolutely fabia-lous: Skoda’s 4th-gen hatchback demonstrates staying…
- Is this the most high-tech car on the road? Mercedes’ £100k EQS driven
- Kia’s EV6 coupe-like crossover is creating an electrical storm at £41k
- Audi RS3 Sportback is a veritable muscle car that exudes performance
- Honda’s bold statement with new family oriented hybrid compact HR-V
- Peugeot’s new pride: Plug-in hybrid 308 will make you green with envy
- Back in black! We try Rolls-Royce’s heavy-metal Black Badge Ghost
- Ford’s electric battle hotting up with Tesla: Mustang Mach-E GT driven
- Another reason Y Tesla is a hit: Model Y driven ahead of UK arrival
- BMW’s new i4 might be the Cinderella model in its blossoming EV range
- Style, space and pace: Arkana SUV – Renault’s first hybrid – impresses
- Does BMW’s new electric car have the iX factor? We tests the £70k SUV
- Toyota Yaris Cross is a beefed-up version of its award-winning Yaris
- Is the Tesla Model 3 the future? RAY MASSEY says it is not perfect
- Futuristic Hyundai Ioniq 5 – the new zero-emission family car – driven
- Is VW’s £23k Golf Life too budget or all the car you could ever want?
- Funky, French and frugal: We test drive Citroen’s new C3 Aircross SUV
- Even by electric car standards, the new Audi Q4 e-tron feels different
- Does Aston Martin’s new model lead the pack? F1 Vantage pace car
- Should you Qash in on Nissan’s SUV? We test the new UK-built Qashqai
- RAY MASSEY ‘Is the Genesis GV80 a Korean copycat Bootleg Bentley?’
- The Highlander challenge: Toyota’s new hybrid seven-seat SUV tested
- Skoda’s hot estate goes hybrid: The £40k electrified Octavia vRS iV
- Kia Sorento switches gear and moves upmarket – is it still good value?
- Toyota’s new £50k Mirai hydrogen fuel cell car has a 400-mile range
- Is VW’s electric family SUV worthy of the crown World Car Of The Year?
- A century before Tesla: We have a go in a replica of World’s first EV
- Dacia’s hard bargain: First drive of Sandero, UK’s most affordable car
- Does Audi’s Q5 Sportback have substance or is the SUV too impractical?
- Jack of all trades: Porsche Taycan Cross Turismo is an £80k estate EV
- Vauxhall’s full of beans: First drive of the new Mokka crossover
- V8 or W12? Which Bentley Flying Spur should you buy (in your dreams)?
- Is Ford’s Mustang Mach-E worthy of the fabled muscle-car name?
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
https://www.dailymail.co.uk/money/cars/article-11862847/Hikes-car-tax-rates-1-April-reveal-huge-stings-drivers.html?ns_mchannel=rss&ns_campaign=1490&ito=1490 Hikes to car tax rates from 1 April reveal huge stings for drivers