Honest John News Tax & Insurance

Car tax to rise from April 1st

David Ross, Editor
Fri, 31 Mar 2023
  • Car tax rates rise from April 1st 2023
  • Standard rate increases to £180
  • First year tax rates also go up
  • Electric cars to pay tax from 2025

Millions of motorists will be paying more for their car tax from tomorrow. Following the 2023 Budget announcement earlier this month, car tax is increasing with the rate of inflation.

The standard rate for 12 months tax is now £180 (up from £165) while for alternative fuel cars it has risen to £170 (from £155). This applies to cars registered from April 1st 2017.

First year tax rates have also changed for new cars have also increased, by up to £240 for the highest emissions cars while the average family car in Band F (111-130g/km) will cost £20 more.

>> See the new 2023 car tax rates in full

The so-called ‘showroom tax’, levied on cars costing over £40,000 when new for years two through to six after registration, also goes up by £35 to £390.

Cars registered after March 1st 2001 and before April 1st 2017 also face increases, but by smaller amounts.

Band A and Band B vehicles remain the same, while the annual increase is £5 for Band C vehicles up to £65 for the highest-emitting vehicles in Band M.

How much is my road tax?

For older cars registered before March 1st 2001, the 1549cc and below rate increases by £20 to £200 a year, while the higher rate goes from £295 to £325 a year, an increase of £30.

From 2025, electric vehicles will no longer be exempt from car tax. The change applies to electric cars, vans and motorcycles and will "ensure that all road users begin to pay a fair tax contribution as the take up of electric vehicles continues to accelerate", the Government said.

Other changes from April 2025, will see VED Band A scrapped for cars registered between 2001 and 2017. Instead they will all move to Band B.

This means that cars that currently qualify for zero road tax through VED Band A will pay £20 a year from 2025. This applies to popular models such as the Ford Fiesta, Volkswagen Golf and Nissan Qashqai, which emit less than 100g/km and currently have zero road tax. 

Ask HJ

Are disabled drivers exempt from road tax?

My wife is the registered keeper of our car, she has received adult disability benefit from September last year. How does she claim for exemption from the road tax?
If your wife is in receipt of the higher rate mobility component of Disability Living Allowance, the enhanced rate mobility component of Personal Independence Payment or War Pensioner's Mobility Supplement then she can apply for an exemption from road tax (VED). However, the rules state that it must only be used for the disabled person's mobility needs. If she is in receipt of PIP standard rate mobility component then she can apply for a 50 per cent reduction in road tax. To get this reduction you need your exemption certificate serial number and the surname, date of birth and National Insurance number of the exemption certificate holder, and you apply for vehicle tax in the normal way through the government's 'Tax your vehicle' website.
Answered by David Ross
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Ask HJ

If I buy an electric car that's more than £40k, will I be liable for showroom tax from 2025?

If I buy an EV with list price £39500 and as an option have metallic paint at £555 will this make the car liable for the £40,000 'showroom tax' rate when EVs have to pay VED in a couple of years time?
Under the VED changes planned to come into effect in April 2025, EVs will no longer qualify for the zero rate, including the premium supplement for vehicles costing over £40,000 when new. We spoke to HM Treasury and a spokesperson told us that: “Anyone who buys a car which costs more than £40,000 must pay an additional supplement on top of the standard rate of Vehicle Excise Duty for five years. The list price includes the price of any non-standard accessory.” The list price of a vehicle includes the manufacturers recommended retail price, the price of any non-standard accessories fitted by the manufacturer, VAT, delivery charges and pre-delivery inspection charges. The good news is that the HM Treasury confirmed that this will only apply to EVs registered from April 2025 onwards. So if you buy now, you won't be retrospectively taxed or have to pay more from 2025.
Answered by David Ross
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