The cost of living has skyrocketed over the past year, with more increases set for April 2022 on gas, electricity, and council tax. Another expense that will go up in April 2022 is the vehicle excise duty (VED). This, coupled with rising fuel prices, will inevitably increase the cost of owning a vehicle. Given that many household budgets are already stretched thin, drivers will want to know if they can pay less.
What you can do to save on the road tax in 2022
UK vehicle owners are required to pay VED, and rates vary by vehicle type and first registration date. VED rates have been increasing in line with inflation since 2010. The April 2022 rise was announced by Chancellor Rishi Sunak in his Autumn Budget 2021 and is now just weeks away. Some motorists have spotted that there is a way around the rising road tax costs though. Since the VED increase only takes effect in April, if you pay for a year of VED on your vehicle before April, you get another 12 months at the current rate. The DVLA confirmed that, since the higher rates of road tax will not go live until April 2022, anyone who prepays their car tax before then will pay at the pre-April rate. As a result, if you pay now, you can delay paying more road tax until March 2023.
How much will VED increase in April 2022?
Payments for VED are divided into two categories: standard rate and first-year rate. First-year vehicle excise duty rates are based on the CO2 figures when the vehicle was built, and are also known as 'showroom taxes'. From that point on, you pay an annual renewal fee which is a standard rate.
You pay VED based on the amount of CO2 your car emits, so the most environmentally friendly cars pay the least, while the most polluting vehicles pay the most. All commercial vans pay a standard fixed rate for their VED.
VED rates for vehicles registered on or after 1 April 2017
The VED will remain at £0 if your vehicle produces no CO2 emissions. The standard road tax rate for vehicles first registered after 1st April 2017 will rise by £10, from £155 to £165.
In April 2022, the following changes will be made to first-year car tax rates:
- If your vehicle produces CO2 emissions of between 1 and 50g/km, your first-year rate will remain at £10.
- If your vehicle produces CO2 emissions of between 51 and 75g/km, your first-year rate will remain at £25.
- If your vehicle produces CO2 emissions of between 76 and 90g/ km, your first-year rate will increase from £115 to £120.
- If your vehicle produces CO2 emissions of between 91 and 100g/km, your first-year rate will increase from £140 to £150.
- If your vehicle produces CO2 emissions of between 101 and 110g/km, your first-year rate will increase from £160 to £170.
- If your vehicle produces CO2 emissions of between 111 and 130g/km, your first-year rate will increase from £180 to £190.
- If your vehicle produces CO2 emissions of between 131 and 150g/km, your first-year rate will increase from £220 to £230.
- If your vehicle produces CO2 emissions of between 151 and 170g/ km, your first-year rate will increase from £555 to £585.
- If your vehicle produces CO2 emissions of between 171 and 190g/km, your first-year rate will increase from £895 to £945.
- If your vehicle produces CO2 emissions of between 191 and 225g/km, your first-year rate will increase from £1345 to £1420.
- If your vehicle produces CO2 emissions of between 226 and 255g/km, your first-year rate will increase from £1910 to £2015.
- If your vehicle produces CO2 emissions of over 255g /km, your first-year rate will increase from £2245 to £2365.
When a car's list price exceeds £40,000, an additional £355 per year is added to the standard rate for 5 years.
A hybrid, bioethanol and liquid petroleum gas vehicle will be taxed at £155 per year.
Road Tax bands and rates for cars registered on or after 1 March 2001
- For cars in bands A (up to 100g/km), B (101 to 110 g/km) and C (111 to 120g/km), your VED will remain the same at 0, £20 and £30 respectively.
- For cars in band D (121 to 130g/km), your standard rate will increase by £5, from £130 to £135.
- For cars in bands E (131 to 140g/km), F (141 to 150g/km) and G (151 to 165g/km), your standard rate will increase by £10 - from £155 to £165, from £170 to £180 and from £210 to £220 respectively.
- For cars in bands H (166 to 175g/km), I (176 to 185g/km) and J (186 to 200g/km), your standard rate will increase By £15 - from £250 to £265, from £275 to £290 and from £315 to £330 respectively.
- For cars in band K (201 to 225g/m + cars emitting over 225g/km registered before 23 March 2006), your standard rate will increase by £20, from £340 to £360.
- Cars in bands L (226 to 255g/km) and M (over 255g/km) will see the highest increase of £30. For cars in band L, your standard rate will increase from £585 to £615. For cars in band M, your standard rate will increase from £600 to £630.
VED rates for cars and vans registered before 1 March 2001
- Engine sizes up to 1,549cc will see a road tax increase of £10, from £170 to £180.
- The VED rate will be increased by £15, from £280 to £295, for vehicles with engines over 1,549cc.
VED rates for vans registered on or after 1 March 2001
- The road tax rate for early euro 4 and euro 5 compliant vans will remain the same at £140.
- All other vans will see a VED increase of £15, from £275 to £290 per annum.
What happens if you fail to pay your car's or van's tax?
Each month, the Driver and Vehicle Licensing Agency (DVLA) conducts computer tests to verify that owners of cars registered in the UK have paid their taxes. Untaxed vehicles that are not declared SORN (not on the road) will be fined £80 if the system flags them up. You will receive a 50% discount if you pay this within 28 days. Failure to pay the fine, however, could result in a court case and a fine of up to £1000. You risk your car or van being clamped by the DVLA until the correct tax is paid.
Will the increasing VED affect my leased vehicle?
When you lease a car or van on contract hire
, your VED is included in your monthly rentals for the length of your agreement at the rate it was when you signed it. Changes not directly related to your funder, such as a Road Tax increase, will result in additional charges. You will be invoiced for the difference between the original VED rate and the new rate. Our FAQ 'Will I occur extra charges during my vehicle lease agreement
' explains this in more detail.
This blog should have provided you with all the information you need about the new vehicle road tax rates. We hope our hack for delaying the increase will also help you save money. We are here to help if you have any more questions or require assistance in leasing your next car
. Click below to get started!