Tuesday, November 29, 2022
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Drivers warned of huge driving law changes in April – Car tax rise and diesel restrictions

As the new financial year kicks off, many driving laws will also be changing, including an increase in the amount of car tax motorists will pay. Other changes include Government grants for electric vehicles being extended, as well as changes to employee benefits which could see drivers paying more for their vehicles.

Car tax increases

Car tax or Vehicle Excise Duty (VED) is increasing on April 1, in line with inflation, meaning many drivers will be seeing their payments rise.

VED is calculated using the vehicle’s age and CO2 emissions, with bigger, older engines usually producing more CO2, resulting in higher costs.

Cars with a list price of over £40,000 when new pay an additional rate of £355 per year on top of the standard rate, for five years.

READ MORE: New car tax proposals would save drivers money on fuel costs

Red diesel is sold with a far smaller amount of fuel duty added, meaning the reduced rate costs around £2.4billion a year in revenue compared to if duty was charged at the main rate.

It attracts significantly less fuel duty than regular, white diesel with duty of 46.81 pence per litre less for red diesel than white diesel.

It has been predicted that the fuel changes could have a huge impact on businesses, as some could face additional fuel expenses of between £100,000 and £400,000 per year.

Operating costs for many construction and agricultural businesses could rise by 15 percent.

Benefit in kind tax increases

Benefit-in-Kind (BiK) tax rates are set to change in April rising from one percent to two percent for fully electric vehicles.

BiK rates for other vehicles are also set to increase by one percent.

Following this upcoming tax year, the BiK rate for electric cars will remain at two percent until 2025, although many drivers and experts are calling for the Government to make future plans clearer.

EV grant extension

From April 1, 2022, the threshold to claim the small truck grant of up to £16,000 will be increased from 3.5 tonnes to 4.25 tonnes.

Vans up to 4.25 tonnes will be able to claim the large van grant of up to £5,000. 

Drivers with standard licences can continue driving electric goods vans at a higher weight limit, making it easier for businesses to make the switch.



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