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Bad news for drivers as car tax set to rise from April

Emma Lunn
Written By:
Emma Lunn
Posted:
Updated:
17/03/2023

Vehicle Excise Duty (VED) – often referred to as car tax – will increase in line with Retail Price Index (RPI) inflation of 10.1% from 1 April 2023.

The updating was confirmed in the Spring Budget on Wednesday. VED rates have increased in line with inflation since 2010.

VED will be uprated from April 1 by the rate of RPI for cars, vans and motorbikes. But to support the haulage sector, VED for HGVs will remain frozen for the 2023/24 tax year.

The Government says that increasing VED rates by RPI from April 2023 to April 2024 will ensure that VED receipts are maintained in real terms and that motorists “make a fair contribution to the public finances”.]

What is VED?

VED is an annual tax you have to pay to have your car on the road. You have to pay the tax when the vehicle is first registered. Drivers can choose to pay for 12 months VED upfront, every six months, or monthly.

How much VED you pay depends on when your car was registered and how much carbon dioxide emissions it produces. From 1 April 2017, a reformed VED system was introduced for new cars, with zero emission models paying no VED at first registration, whilst the most polluting pay over £2,000.

As an example, a car in VED band D with CO2 emissions of 121-130g/kg currently pays £150 a year for VED – this will go up to £165 from April.

You can check how much car tax you pay on your vehicle on Gov.uk.