19 March, 2018

Is your car tax increasing in April?

Many drivers of diesel cars could find themselves paying more in car tax from April onwards. It’s because, from that time, previously announced hikes in vehicle excise duty – VED – will come into effect. Some people could end up paying as much as £500 extra in VED; however, many drivers appear to be unaware of exactly how the tax rules are changing or even that VED is going up for diesel car drivers. Below, we unpack much of the confusing narrative around the VED increases.

How car tax is changing: in a nutshell

The changes, first announced in last year’s Budget, mean that diesel car drivers will, for their first year after registering their car, be shifted one car tax band higher if their vehicle does not satisfy a newly-specified emissions standard. The policy change has provoked concern from car experts who deem it slightly unfair, Express explains. This is because no new diesel car currently meets the Real Driving Emissions 2 standard, to which car manufacturers will not need to start adhering until 2020.

The drivers financially hit most heavily by the changes will be those using cars producing CO2 in the range of 171 to 225g/km. Those drivers will have to shell out £500 extra, while cars generating 130 to 150g/km will bring £300 more in car tax for their drivers. However, one piece of good news is that these higher charges are only applicable in the first year.

For the second year, the rates will switch back to standardised VED rates introduced back in 2017. Those rates are £140 for diesel vehicles; nonetheless, this is still higher than the £130 which drivers of alternative fuel vehicles, like bioethanol, LPG and hybrid, would need to pay in the second year. Meanwhile, the second year standard rate is zero if you drive a vehicle which does not emit CO2.

Can you avoid the increased charges?

If you already have a diesel car with a registration date before 1 April 2018, rest assured that your car will be covered under the old system and, therefore, you will continue paying car tax at the old rates. Indeed, as the new rates won’t enter force until 1 April, you can beat the hike by either buying and registering a new diesel car before that date or, even after it, purchasing a pre-registered car. Despite usually having some “delivery miles”, such cars are basically new, Express says.

If you still want to completely avoid the inflated fees after 1 April has passed, you could consider ditching diesel altogether. You might not strictly need a car that relies on this type of fuel – especially if, most of the time, you would only use it to drive relatively short distances. Nonetheless, if you regularly have to drive lengthy distances, you might still feel a need for diesel.

There is also a way of significantly reducing your expenditure on car tax even after 1 April: buying a diesel car the emissions of which do not exceed 110g/km. Cars in this category will only be subjected to a £20 increase in tax. However, as such cars tend to be small cars, superminis and hybrids, they might not meet your practical requirements; think carefully before going down this route.

Cutting tax isn’t the only car-related money-saving option

It should be a major cause of concern that, in a recent survey highlighted by This is MONEY.co.uk, 87% of drivers admitted to not understanding – or, in some cases, even knowing about – the upcoming car tax changes. Meanwhile, 60% of survey respondents said the next car they buy will not be a diesel vehicle, with a third citing the tax increases as directly influencing this decision.

However, if you know that you are among the people set to pay higher car tax come April, then the onus is on you to reduce the overall financial burden of your car by all practical means. One way of doing that could be selecting cost-effective insurance for your vehicle.

Keep in mind that, even if you habitually renew your current car insurance policy week after week, you are strictly not obliged to do so. You might not have realised how much you could save by changing policy – and, while the mere idea of manually shopping around for a new policy could convince you that the hassle wouldn’t be worth it, you wouldn’t strictly have to do this shopping around. Instead, you could request that us at Call Wiser compare car insurance quotes for you.

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