Vehicle Excise Duty (VED), commonly referred to as car tax, is set to change from April, with many petrol and diesel drivers expected to see increases in what they pay annually.
The changes form part of wider updates to vehicle taxation and are linked to inflation and emissions-based charging structures.
What’s Changing?
VED rates are expected to rise in line with inflation, meaning many motorists will see slightly higher annual car tax bills.
For most conventionally powered petrol and diesel vehicles registered after April 2017, the standard annual rate is expected to increase modestly from previous levels.
Vehicle tax rates are calculated using several factors, including:
- Vehicle emissions
- Fuel type
- Date of first registration
- Vehicle classification
Higher-emission vehicles typically face higher first-year tax rates compared to lower-emission models.
Who Will Be Affected?
The changes will affect many vehicle owners across the UK, particularly drivers of:
- Petrol cars
- Diesel cars
- Vans
- Motorcycles
Drivers of higher-emission vehicles are likely to experience the largest increases.
Although the increases may appear relatively small individually, rising ownership costs such as fuel, insurance, servicing, and taxation continue to put pressure on motorists during the cost-of-living crisis.
If you’re concerned about rising ownership costs, you may also find this useful:
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What Support Is Available for the Transport Sector?
Some support measures remain in place for commercial transport operators.
For example, certain Heavy Goods Vehicle (HGV) tax rates and levies may remain frozen for specific periods to support the haulage and logistics sectors.
The aim of these adjustments is to balance public revenue generation with ongoing support for businesses and essential transport services.
What About Electric Vehicle Owners?
Electric vehicle ownership taxation is also changing over time.
Historically, many fully electric vehicles benefited from exemption from standard VED charges. However, future taxation changes are expected to gradually bring electric vehicles into the wider road tax system as EV adoption increases.
Despite this, electric vehicles may still benefit from lower running costs overall compared to petrol and diesel alternatives, particularly when it comes to fuel and maintenance expenses.
Drivers considering switching to electric may also be interested in:
How Long Do Electric Cars Last?
Why Are Car Tax Changes Happening?
Vehicle taxation is regularly reviewed to reflect:
- Inflation
- Environmental targets
- Emissions policies
- Government transport funding requirements
The long-term goal is to encourage lower-emission vehicle ownership while maintaining funding for road infrastructure and transport investment.
Final Thoughts
Rising car tax costs are another factor drivers need to consider alongside fuel prices, insurance premiums, servicing, and maintenance expenses.
Before buying your next vehicle, it’s worth considering not only the purchase price, but also the long-term running costs associated with ownership.
For more ownership and running cost advice, visit the maintenance guidance hub
If you’re considering changing your current vehicle due to rising ownership costs, you can also quickly check its current value using our free online valuation tool.