Drivers can 'escape' new car tax and VED bands by doing 'one thing'

Drivers can 'escape' new car tax and VED bands by doing 'one thing'

by · Birmingham Live

Drivers can escape new car tax bands under the new Labour Party government in 2025 by doing one thing. Andy Wood, international tax advisor from Tax Natives, warned “most vehicles” would be affected in the New Year.

In a bid to get ahead, he stressed motorists, road users and drivers who are up and down the UK, using roads across England, should look at their budgets before Christmas and “plan ahead for added costs” to avoid being caught out.

He said: “Get ready for a shake-up in the cost of owning a vehicle. Starting April 2024, Vehicle Excise Duty (VED) is going up thanks to adjustments linked to the Retail Price Index. While first-year rates for cars are staying the same, the annual cost for most vehicles – like standard cars, vans, and motorcycles – is set to rise.

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“If you’re a driver, it’s a good time to take a closer look at your budget and plan ahead for these added costs.” The move comes ahead of new VED rates. Unlike more modern vehicles which pay VED based on vehicle emissions levels, older cars pay based on the size of their engine capacity. Meanwhile, vehicles first registered before 1984 are completely exempt from charges due to historic vehicle tax exemption rules.

This means many petrol and diesel owners will feel the sting with rates set to rise across the board. According to motoring experts at Pete Barden, older cars with an engine capacity of 1549cc and below will pay £10 more from the spring.

Annual rates for these motorists will rise from the current £210 to reach £220 per annum, from April 2025. Vehicles above 1549cc will pay £360, up from the current £345 rate paid by motorists today.

The £15 increase may appear a lot but is actually less than the increase for drivers in this category 12 months ago. Last year, rates were increased by £20 with fees jumping up from the previous £325 rate charged to road users in the 2023/24 financial year.