Vehicle Excise Duty is Increasing this Month - Are You Ready?

Did you know that the amount you pay in Vehicle Excise Duty is about to rise? Vehicle Excise Duty, or VED, is a form of car tax that is calculated based on emissions. The Government announced the increased fees last year, and it isn't only new cars that are set to be affected.

Not be confused with road tax, VED is calculated depending on how much pollution (CO2) your car generates. Whether your car is brand new or has been around the block a few times, your VED will increase by either £5 or £15. Anyone buying a new car will have to pay an additional £65 on their tax rate in the first year.

Although new and old cars are subject to the increase in fees, there are still notable exceptions. Firstly, hybrid vehicles owners will receive a discount of £10 on their VED cost, while electric vehicles and those where emissions fall below 100g/km will continue to be exempt, as will cars over 40 years old.

The increase in VED is due to Chancellor Philip Hammond's decision to link VED to the retail price index (RPI) inflation measure. As the RPI rises, so too does the amount of tax payable by each car owner.

The £5 increase applies to cars bought or registered after April 1, 2017, and will see the standard annual rate rise to £145. Cars registered between March 1, 2001, and March 31, 2017, will be subject to the £15 tax increase, except in cases where emissions are under 120g/km. The VED for these vehicles will remain unchanged.

Lastly, Diesel cars that do not comply with the RDE2 will be moved up a tax bracket. Unfortunately for diesel owners, the majority are not clean enough by RDE2 standards, so an increased VED bill can be expected.

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