Drivers of diesel and petrol cars to be penalised under new tax rules

Big tax changes will affect car owners this year.

Vehicle Excise Tax (VED) rates are set to rise in line with inflation for all drivers from April.

Gasoline and diesel owners will all be impacted based solely on the “type of vehicle they buy”.

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However, drivers who own models that cause more air pollution are penalized the most.

VED rates for vehicles producing more than 255g/km CO2 pollution rise to £2,365.

This is an increase of £120 from the current 2021 rate.

Drivers of cars producing 226-255g/km will see an increase of £105, with charges for cars producing 191-225g/km increasing by £75.

Price increases will be seen on all vehicles except those emitting less than 75g/km of CO2.

Sean Kemple, spokesman for Close Brothers Motor Finance, said that to express that drivers should consider switching to electric cars.

He added that the government needs to “balance” tax revenues as more drivers abandon their existing petrol and diesel cars.

Mr Kemple said: “You can see the incentive from a tax perspective that the road tax and benefit in kind are moving towards lower emission vehicles.

“It’s better for everyone involved, so it’s a win-win situation.

The challenge then is how the government then offsets that tax revenue against what it would have received from petrol and diesel vehicles.

“What you see then are the consumers of petrol and diesel, who I think are being penalized by the type of vehicle they are buying.”

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

HM Revenue and Customs said the increase is to ensure VED rates rise with the Retail Price Index (RPI).

The standard rate – the amount you pay after the second year – for cars registered on or after 1 April 2017 is currently £155 a year for anything but zero-emission vehicles.

Budget 2021 confirmed another freeze on fuel tax – the tax you pay per liter of petrol and diesel.

Instead, the fuel tax will remain at the same level – 57.95 pence per liter – as it has been for the past decade.

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