Millions of UK drivers to be hit with car tax hike from April 2024

04 January 2024 , 09:54

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Drivers will see their car tax rise this April (Image: PA)

Millions of UK drivers will be hit with another car tax increase from April 2024, particularly affecting owners of older vehicles.

HMRC has previously confirmed the new Vehicle Excise Duty (VED) charges will be based on Retail Price Index (RPI) inflation from the spring. VED is based on the age of your car, as well as the type of fuel is uses, CO2 emissions and list price, to determine how much tax you need to pay.

For new cars, there is a first-year rate followed by a flat annual rate that is applied from the second year onwards. Pete Barden, motoring journalist, said this means fees will likely rise by less than 6%.

He warned that cars and vans registered before March 2001 could see their yearly costs rise from £200 to £210 if they have an engine size of 1549cc and under. The bigger shock is for vehicles with engines larger than 1549cc, with their annual charges predicted to jump from £325 to £345. This comes only a year after car taxes experienced a £20 surge from £180 to £200 between the years 2022-23 to 2023-24.

HMRC said: "Increasing VED rates by RPI in tax year 2024 to 2025 will ensure that VED receipts are maintained in real terms and that motorists make a fair contribution to the public finances. The Government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2024 in the Autumn Finance Bill 2023. To support the haulage sector, VED for HGVs and the HGV levy will both remain at 2023-24 rates for 2024-25."

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You can pay for your car tax monthly, every six months, or in one annual payment.

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James Rodger