Navigating Road Tax Changes in 2024

Feb 22, 2024

We’re soon to enter a new tax year, which kicks off on 6th April. With this, UK drivers can expect to see a change in their car tax, otherwise known as Vehicle Excise Duty (VED). In case you’re new to this, your VED is based on a combination of factors - namely your vehicle’s age, CO2 emissions and sometimes its purchase cost.

It’s crucial to keep in mind that every vehicle must be registered for VED, even if the vehicle is exempt from actual payment.

So, what’s changing?

VED fees will be rising across the board from the 1st April 2024 - these rises will be in line with RPI (Retail Price Index) inflation. HMRC has said therefore that the prices are not rising in ‘real terms’, but that consumers will feel the impact anyway.

If your car is fully electric, you will be exempt from fees this coming year - though this could change in April 2025. If you drive a hybrid, petrol or diesel car - you can expect a fee hike this April.

How will this affect me?

For cars with smaller engines and those which emit less pollution, this fee change is likely to only be an additional £10-£20 per year. For more polluting cars with larger engines, it might be as much as £40 extra per year.

Those who’ve bought a new car in the past year may find themselves with a steeper than expected bill, especially if their car is a high polluter. Car owners whose vehicle emits more than 255g/km will have to find an extra £140 for the first year’s tax - bringing the total bill for these owners to £2,745. What can we take from these changes? While a higher bill is rarely a great prospect, it’s worth thinking about why we’re seeing these changes and what they might indicate for the future.

The tax exemption for EVs and the maintenance of punitive measures for new, highly polluting vehicles indicates that there is a concerted effort to encourage drivers towards a more sustainable future. If you’re looking to replace your vehicle in the next year, it’s worth keeping this in mind - look out for EV or low-emission incentives, exemptions and discounts.

Make sure to keep an eye on the cheapest fuel prices near you too - this will help keep your driving budget down, even in the face of rising VED fees. For more ideas on how to save money, take a look at our comprehensive guide to unlocking better fuel efficiency.