Petrol and diesel car drivers to be penalised under new car tax rules

Petrol and diesel car drivers to be penalised under new car tax rules

A warning has been issued to all drivers in the UK with petrol or diesel cars that they are set to be penalised.

Vehicle Excise Duty (VED) rates are set to rise for everyone from April 11.

And petrol and diesel owners will be more affected based solely on the “type of vehicle they are purchasing”, according to Sean Kemple, a spokesperson for Close Brothers Motor Finance.

Those owning models which produce a lot of air pollution are set to be the most affected.

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VED rates for vehicles that produce over 255 g/km of CO2 pollution will rise to £2,365. This will be a massive £120 increase from the current 2021 rate.

Meanwhile, drivers of cars producing 226 to 255 g/km will see a £105 rise, with fees for cars producing 191 to 225 g/km increasing by £75.

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Price rises will be seen across all vehicles except for those producing less than 75 g/km of CO2.

Mr Kemple has also warned of the “challenge” ahead as drivers look to switch to electric cars.

He said the Government would need to “offset” tax revenues as more drivers started to ditch their existing petrol and diesel cars.

Speaking to Express, he said: “You can see the incentive from a tax perspective of road tax and benefit in kind moving towards lower emission vehicles. That’s better for everyone involved so it’s a win-win situation.

“The challenge then is, how does the Government then offset those tax receipts in terms of what they would have been getting from petrol and diesel vehicles. What you then see is the consumers of petrol and diesel, in their view, I suppose being penalised by the type of vehicle they are purchasing.”

The Treasury has previously estimated it will need to fill a £40billion black hole as a result of the loss of VED and fuel duty rates.

The VED increase is set to come into effect on April 1, 2022.

The changes were first announced during last year’s Autumn Budget.

HM Revenue and Customs said the rise was to ensure VED rates were uprated with the Retail Prices Index (RPI). It said increasing VED rates in 2022 would ensure rates were “maintained in real terms”.

It said the changes would ensure motorists “make a fair contribution to the public finances”.

“This measure will impact on motorists owning a car, van or motorcycle or using a motorcycle trade licence. The increase in VED rates is in line with RPI meaning rates will remain unchanged in real terms for vehicle owners,” it added.

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