Rachel Reeves has confirmed updated costs for vehicle tax, potentially hitting drivers of older cars with a £225 charge. Owners of vehicles manufactured before 2017 may find themselves paying higher rates under new tax rules.
How the New Tax System Works
Most newer cars are subject to a flat £200 annual payment, but older vehicles are taxed based on their emissions levels. This can result in charges that are either lower or significantly higher than the standard £200, reaching up to £790.
Older cars are placed into tax bands ranging from A to M, depending on how polluting they are. Band A vehicles cost as little as £20 to tax, while gas guzzlers in Band M leave drivers with a hefty £790 bill. Many cars fall into bands E or F, with Band E matching the £200 standard and Band F costing £225.
Expert Insights on Tax Changes
Andy Wood, tax expert at Tax Barrister UK, explained: "A lot of drivers still assume road tax is calculated purely on the age of the vehicle, but emissions remain one of the biggest factors. Even relatively modest differences in CO2 output can place vehicles into entirely different tax bands, which can have a noticeable impact on annual running costs."
The new rules also mean that vehicles emitting under 100 g/km of CO2 no longer receive free road tax. Owners of these cars must now pay at least £20 annually. Additionally, electric vehicle drivers are now required to pay vehicle tax.
What This Means for Motorists
Wood added: "The removal of the zero-rate band for cars emitting under 100g/km has caught some drivers off guard because many had become used to paying nothing at all. While £20 may not sound substantial on its own, it reflects a wider shift towards bringing more vehicles into the VED system regardless of emissions performance."
Motorists are advised to research tax bands before purchasing a used car, as payments can range from £20 to £790. The car you choose can significantly affect your annual running costs.
