Vehicle Excise Duty changes April 2022

06 January 2022

Road tax (also known as vehicle tax, car tax or vehicle excise duty) is set to increase in line with inflation from April 2022 and will see the expense of owning a diesel or petrol car or van rise.

The amount of road tax you will pay depends on how environmentally friendly it is and how old your car is:

Cars or vans producing over 255g of CO2 emissions per km travelled will see the first-year rate increase from £2,245 to £2,365.
Cars or vans producing between 226g and 255g per km travelled will rise from £1,910 to £2,015.

Vehicles producing less or zero CO2 emissions fare better:

Cars or vans producing between 76g and 90g of CO2 emissions per km will see a first-year rate increase from £115 to £120.
Zero-emission vehicles, including electric cars, will continue to pay zero VED for the first year.

How is road tax calculated?

Road tax is calculated using the vehicle’s CO2 emissions (measured using WLTP standards) and age. Larger, older engines typically create more CO2, so you pay a higher tax on them.

Do I have to pay road tax?

Yes, you need to pay road tax on the majority of vehicles. However, there are some exemptions in a few instances:

Owners of brand-new cars that produce zero grams of CO2 emissions and have a list price of less than £40,000
Cars over 40 years old
Some drivers with disabilities, provided they meet specific criteria

Otherwise, vehicles used or parked on public roads must pay road tax every year.

If you don't use your vehicle at all (not even for a quick trip down the road) and park on private land, you can declare a Statutory Off-Road Notification (SORN).

One of the benefits of leasing a vehicle is that road tax is included as part of your personal or business contract hire agreement.

Benefit in Kind (BiK) rates are set to increase

Benefit in Kind (BiK) rates will also increase from April 2022, as per the following:

Electric vehicles, and other cars producing under 50g of CO2 per km, will now pay 2% BiK instead of 1% per cent.
All other vehicles will pay 1% more, regardless of their CO2 levels. The exceptions to this are cars or vans that create in excess of 156g CO2 per km – BiK rates for these vehicles will remain at 37%.

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