Vehicle Excise Duty: How much road tax will I pay after April 2022?

Changes to Vehicle Excise Duty in April 2022

Every driver's favourite time of year, April 2022 once again brings with it a hike in road tax for the coming year.

Road tax, or as it's officially known, Vehicle Excise Duty (VED), is set to rise in line with inflation and will see the expense of owning a petrol or diesel vehicle rise. But the amount you pay depends on both how environmentally friendly your car or van is, and how old it is. Cars that are kinder to the environment are kinder on your wallet when it comes to running costs and taxes.

If you've got a 20-year-old motor that's held together with sheer willpower and a bit of duct tape, you'll pay more than your neighbour who's got a brand-new set of wheels with a hybrid engine.

Essentially, vehicles producing over 255g of CO2 per km travelled will see the first-year rate increase to £2,365, while vehicles producing between 226g and 255g will see a price increase from £1,910 to £2,015.

If you've got a car or van that produces less than 226g of CO2 per km travelled, you'll fare a little better.

Vehicles that produce between 76g and 90g will see the first-year increase to £120, while zero-emissions vehicles will continue to pay zero VED for the first year.

Do I have to pay road tax?

The long and the short of it is if you drive a car, you must pay VED.

The only exemptions to road tax are cars that are over 40 years old, some disabled drivers if they meet specific criteria, and electric cars for the first year. Otherwise, anyone with a vehicle that's in use or parked on a public road needs to pay vehicle tax every year.

If your car is sitting on your drive gathering dust and you've no plans to use it, you can declare a Statutory Off-Road Notification (SORN), and you won't need to pay tax on it until it's in use again.

How is my road tax calculated?

For several years now road tax has been calculated using WLTP standards, replacing the NEDC testing that was lab-based with more rigorous, and often more realistic, tests. It's resulted in a more truthful figure when it comes to CO2 emissions, but often a higher one.

Revisions to road tax are nothing new.

There have been several changes to VED over the past few years, especially with the increase in electric and hybrid vehicles. If you've chosen to switch over to the electric side, you'll benefit financially from reduced - or even zero - road tax.

Road tax changes affect every car, from tiny superminis right up to honking great SUVs, and whether you've bought, leased, or gone down the PCP route.

The good news is if you do choose to lease, VED is included in the total cost. This means that any car lease deals listed after 1 April 2022 will include the new rates of tax for that vehicle, making it much less of a hassle for you.

Are there any changes to company car tax?

Benefit-in-Kind tax is also set to rise in April 2022.

If your business lease is electric, or it produces under 50g CO2 per km, you'll now pay 2% BiK instead of 1%. All other vehicles will pay 1% more whatever their CO2 levels are.

The only exception to this is vehicles that create more than 156g CO2 per km - BiK for these cars or vans will remain at 37%.