Vehicle Excise Duty (VED) Rates Due to Change

30th Mar 2022

Changes to VED

Vehicle Excise Duty (also known as vehicle tax, car tax or road tax) is set to increase in line with inflation this April and will see the cost of owning a petrol or diesel vehicle rise.

The Chancellor, Rishi Sunak, has announced new road tax rates for 2022 to 2023 as part of the Spring Budget. These new road tax rates affect all cars and vans in the UK and comes into effect on 1 April 2022. The amount of VED you will pay depends on how old your vehicles are and how environmentally friendly they are, as it is calculated using the vehicle’s age and CO2 emissions.

What is VED?

Commonly known as ‘car tax’ or ‘road tax’, the Vehicle Excise Duty (VED) system is split into two parts. A new car’s tax cost can range from £0 to £2,245 in the first year depending on its CO2 emissions, although the cap is set to rise to £2,365 from April 2022. All cars then move to a flat annual rate for the second year onwards.

  • For drivers of petrol and diesel cars registered after 1 April 2017, the flat annual rate is currently £155, and for alternatively fuelled cars (hybrid, bioethanol or LPG) the rate is £145.
  • For cars with a list price of £40,000 or more, from April 2022, an extra £355 tax is applied for the first five years.
  • Drivers of cars producing zero emissions do not have to pay car tax, even if the list price is more than £40,000.

VED: What are the changes for 2022/23?

The standard rate of road tax VED for cars registered after 2017 has increased by six percent, which means the tax you pay after year one has increased from £155 to £165, other changes include:

  • The first-year road tax has also been adjusted to hit high-polluting cars. For most car buyers, that means road tax now ranges from £120 (for cars producing 76 to 90g/km) to £585 (151 to 170g/km). Meanwhile, owners of low polluting cars that produce 0 to 75g/km of CO2, pay the same tax they did in 2021, ranging from zero to £25.
  • Cars in the 171 to 190g/km bracket now pay £945 (formerly £895), while cars that produce 191 to 225g/km see their tax rise by £85 to £1,420, and you will pay £2,015 for a car that produces CO2 levels of 226 to 255g/km.
  • But the heaviest hit is reserved for cars that sit in the over 255g/km group – like the Audi R8; which now pay first year tax of £2,365 – £120 more than before.
  • Premium car tax, which applies to any car with a list price of £40,000 or more (such as the Mercedes-Benz S-Class), has also jumped from £335 to £355; which is paid for the first five years after the car's registration.