Money Wellness
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calendar icon14 Mar 2024

Car tax set to rise with inflation

UK drivers will be hit with a standard car tax increase from April, based on the Retail Price Index (RPI).

What is car tax?

Vehicle excise duty (VED) is an annual charge that is a legal requirement for all vehicles registered in the UK. VED road tax rates for cars first registered after March 2001 and before April 2017 are split across 13 bands depending on the CO2 emissions of the vehicle. 

 While the annual cost for most drivers will only see a rise in the tax from £5-£10, people with new vehicles emitting higher levels of CO2 will face a significant £140 increase in the first year.

These measures are to help promote greener and more environmentally friendly transportation choices throughout the UK.

You could be exempt from VED if:

  • You drive an electric car (EV's are set to be taxed from 2025).
  • You have a Low CO2 car, which means cars first registered between 1 March 2001 and 31 March 2017 that produce less than 100 grams per kilometre of CO2 are exempt from road tax. Hybrids registered from these dates emitting under 100g/km of CO2 are also road-tax exempt.
  • You have a disability, and you're on benefits. 
  • If your car is more than 40 years old.
  • If you have a car but aren't planning to drive it for some time, you can make a statutory off road notification. You won’t be able to drive the car if you SORN it, but you won’t have to pay road tax on it, either. 

It’s important to note that if your vehicle is exempt you still need to apply for exemption annually, otherwise you may risk a fine of up to £1000.

You can check vehicle tax by visiting the DVLA website.

Avatar of Lydia Bell-Jones

Lydia Bell-Jones

With a background in banking, Lydia has been writing professionally for over five years. She is passionate about helping people improve their personal finances and has a particular interest in the connection between money and mental health.

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