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Spring Budget: Vehicle excise duty changes from April 2022
Drive a petrol or diesel? Here's how much your VED tax bill is going up by in April 2022.
Words by: Andrew Woodhouse
Additional words by: Dan Trent
Last updated on 22 March 2022 | 0 min read
Vehicle Excise Duty (also known as vehicle tax, car tax or road tax) is set to rise in line with inflation from April 2022 and will see the cost of owning a petrol or diesel vehicle rise.
The amount of VED you’ll pay depends on how old your car is and how environmentally friendly it is: • Vehicles producing over 255g of CO2 emissions per km travelled will see their first-year rate rise from £2,245 to £2,365. • Vehicles producing between 226g and 255g per km travelled will see increases from £1,910 to £2,015. Vehicles producing lower CO2 emissions, or none at all, will fare better: • Vehicles producing between 76g and 90g of CO2 emissions per km will see a first-year rate rise from £115 to £120. • Zero emission vehicles, including electric cars, will continue to pay £0 in VED for the first year.
The amount of VED you’ll pay depends on how old your car is and how environmentally friendly it is: • Vehicles producing over 255g of CO2 emissions per km travelled will see their first-year rate rise from £2,245 to £2,365. • Vehicles producing between 226g and 255g per km travelled will see increases from £1,910 to £2,015. Vehicles producing lower CO2 emissions, or none at all, will fare better: • Vehicles producing between 76g and 90g of CO2 emissions per km will see a first-year rate rise from £115 to £120. • Zero emission vehicles, including electric cars, will continue to pay £0 in VED for the first year.
How is VED calculated?
Vehicle excise duty is calculated using the vehicle’s age and CO2 emissions (measured using WLTP standards). Bigger, older engines tend to produce more CO2, and so you pay more tax on them.
Learn more about how VED is calculated, and which tax bands are used.
Learn more about how VED is calculated, and which tax bands are used.
Do I have to pay VED?
Yes, you need to pay Vehicle Excise Duty (VED) on the majority of vehicles, though for some cars the charge is £0. Even then you have to go through the same process and keep your paperwork up to date - it's just it doesn't cost you anything. Cars (and drivers) currently qualifying for the zero charge include:
• Owners of brand-new cars that produce 0g of CO2 emissions • Owners of cars registered between March 1 2001 and March 31 2017 with CO2 emissions of 100g/km or less (if in doubt check the V5C registration certificate or check the gov.uk website) • Cars that are over 40 years old • Some drivers with disabilities, provided they meet certain criteria Outside of that, vehicles used or parked on public roads need to pay VED every year. If your vehicle isn’t used at all (not even for a quick trip down the road) and is parked on private land, then you can declare a Statutory Off-Road Notification (SORN).
• Owners of brand-new cars that produce 0g of CO2 emissions • Owners of cars registered between March 1 2001 and March 31 2017 with CO2 emissions of 100g/km or less (if in doubt check the V5C registration certificate or check the gov.uk website) • Cars that are over 40 years old • Some drivers with disabilities, provided they meet certain criteria Outside of that, vehicles used or parked on public roads need to pay VED every year. If your vehicle isn’t used at all (not even for a quick trip down the road) and is parked on private land, then you can declare a Statutory Off-Road Notification (SORN).
Benefit in Kind (BiK) rates are also set to rise
Benefit in Kind (BiK) rates will also rise by one per cent from April 2022 in most instances:
• Electric cars, and other vehicles producing under 50g of CO2 per km, will now pay two per cent BiK instead of one per cent. • All other vehicles will pay one per cent more, regardless of their CO2 levels. The exceptions to this are vehicles that produce over 156g per km – BiK rates for these vehicles will remain at 37 per cent.
• Electric cars, and other vehicles producing under 50g of CO2 per km, will now pay two per cent BiK instead of one per cent. • All other vehicles will pay one per cent more, regardless of their CO2 levels. The exceptions to this are vehicles that produce over 156g per km – BiK rates for these vehicles will remain at 37 per cent.
Fuel duty reduction to provide relief to motorists
One of the biggest challenges that needs to be addressed in the upcoming Spring Budget 2022 is the rising cost of living which has been a result of the Russian invasion of Ukraine.
It is anticipated that Chancellor Rishi Sunak will announce a temporary cut of 5p a litre, from the current 57.95p per litre fuel duty charge, for the first time in over ten years - thanks to the actual amount of borrowings that are almost £26 million than what was anticipated. Fuel duty and VAT constitute more than 50% of the total cost of petrol. Countries like France, Sweden, the Netherlands, Belgium and Germany have already introduced subsidies on fuel to help motorists with the soaring costs. The Republic of Ireland, too, has recently announced a cut of 17p on petrol and 12.5p on diesel till the end of August.
It is anticipated that Chancellor Rishi Sunak will announce a temporary cut of 5p a litre, from the current 57.95p per litre fuel duty charge, for the first time in over ten years - thanks to the actual amount of borrowings that are almost £26 million than what was anticipated. Fuel duty and VAT constitute more than 50% of the total cost of petrol. Countries like France, Sweden, the Netherlands, Belgium and Germany have already introduced subsidies on fuel to help motorists with the soaring costs. The Republic of Ireland, too, has recently announced a cut of 17p on petrol and 12.5p on diesel till the end of August.
Explore electric
Interest in electric vehicles is rising, and cheaper VED bills is just one of the many reasons. Learn more about electric cars on Auto Trader.
