Why motorists could pay more in car tax in 2022
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As the new financial year kicks off, many driving laws will also be changing, including an increase in the amount of car tax motorists will pay. Other changes include Government grants for electric vehicles being extended, as well as changes to employee benefits which could see drivers paying more for their vehicles.
Car tax increases
Car tax or Vehicle Excise Duty (VED) is increasing on April 1, in line with inflation, meaning many drivers will be seeing their payments rise.
VED is calculated using the vehicle’s age and CO2 emissions, with bigger, older engines usually producing more CO2, resulting in higher costs.
Cars with a list price of over £40,000 when new pay an additional rate of £355 per year on top of the standard rate, for five years.
Zero emission vehicles, such as electric cars, will continue to pay £0 in VED for the first year.
Vehicles producing between 76g and 90g of CO2 emissions per km will see a first-year rate rise from £115 to £120.
Vehicles which produce over 255g of CO2 emissions per kilometre travelled will see their first-year rate rise from £2,245 to £2,365.
Alternative fuelled vehicles, including hybrids, bioethanol and liquid petroleum gas, pay £155 per annum.
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Red diesel rebate
From April 1, rebated diesel – also known as red diesel – rebated biofuels and rebated Hydrotreated Vegetable Oil (HVO) will no longer be allowed to be used as they currently are.
From this date, it will no longer be legal to use red diesel for non-road mobile machinery such as bulldozers and cranes or to power mobile generators on construction sites.
Businesses were told to prepare for the change by running down stocks of red diesel in storage tanks and considering the cost implications of a move to “white” diesel, and whether these costs can be passed to customers or contractors.
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