Auto tax: everything you need to know about excise duties on vehicles Car News

How much do you have to pay to tax your car? The government overhauled the excise duty system on vehicles in April 2020 to encourage buyers to choose vehicles with zero or low emissions.

How much you will pay depends on the type of car you own, how old it is, and how you want to pay. This article should help you figure it all out.

Vehicle excise duty, known as VED, is a tax levied by the government on every vehicle on UK public roads and is collected by the Driver and Vehicle Licensing Agency (DVLA). It is a major source of government revenue, totaling billions of pounds each year, which goes into the central coffers of the chessboard.

Although the VED is often referred to as a road tax, this is misleading. The tax is not on the road: it is on the vehicles that use it. Road tax was abolished in the 1930s and the cost of maintaining UK roads is currently covered by general taxation, not specifically VED.

However, in his 2015 budget, then-Chancellor George Osborne announced that a new road fund would be set up, in which all funds raised through VED would go towards building and maintaining the network. British road. This new system was put in place by Rishi Sunak in his 2020 budget, but the scheduled road works are likely to be postponed due to the coronavirus epidemic.

The VED system based on vehicle emissions was introduced in 2001 as part of an effort to reduce pollutants released into the atmosphere. Vehicles emitting more pollutants are more expensive to tax, as part of efforts to persuade drivers to consider purchasing cleaner vehicles.

Changes to the system in April 2020 mean significant differences for new car buyers.

How VED Has Changed Since April 2020

The changes that came into force as of April 2020 were designed as a means of enhancing the attractiveness of owning an electric vehicle.

The government has upped the VED in line with the Retail Price Index (RPI) for cars, vans, motorcycles and motorcycle business licenses, but the biggest change, and one that will be felt the most by motorists and traders, is switching from using NEDC emissions testing as the basis for the different tax brackets of the new WLTP system.

This new method is supposed to provide more realistic readings for a vehicle’s fuel consumption, emissions production and range, and will cause vehicles to go up a range and become, on average, £ 5 of more to tax each year.

The tax on car benefits in kind has been abolished for electric vehicles, as part of an initiative to encourage fleet managers and company car drivers to choose zero-emission models.

Another incentive comes in the form of the removal of the £ 320 ‘Expensive Car Tax’ on electric cars costing over £ 40,000, meaning anyone buying a new electric car from April 1 2020 will save £ 320 per year for years two to six. of property – a total saving of £ 1,600.

The exemption is expected to be in place until March 31, 2025, and outstanding payments for “expensive cars” for cars purchased before April 1, 2020 will be removed.

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This notice was published: 2021-07-07 15:40:00

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