What Is The April 2021 Road Tax Increase (VED) And How Will It Affect You?
Vehicle Excise Duty (VED) rates will be increasing from 1st April 2021. Find out why and what you can do to avoid paying more for your car.
Mar 23, 2021
One way of beating the tax increase is by knowing exactly what it is and why it's happening in the first place. Here's everything you need to know about the road tax (VED) changes set to take course on 1st April 2021.
What are these VED / Road Tax increases that everyone keeps telling me to beat?
If you're a driver in the UK, you'll know that you have to pay for something called Vehicle Excise Duty or a road fund licence (commonly called car tax or road tax). The amount you pay will depend on factors such as engine size, fuel type and the amount of CO2 emissions your vehicle generates at the time it is first registered.
You can now understand why diesel car owners usually have to pay a higher rate of VED than petrol users, and why electric vehicle owners are exempt from paying car road tax entirely. In simple terms, the lower your CO2 emissions are, the lower the rate of your vehicle excise duty.
Previously, this was measured through the New European Driving Cycle test (NEDC) which was first developed in the 90s and last updated in 1997. However, with the rise in advanced technology in the last decade, NEDC testing has become outdated and is no longer truly representative of real-life driving.
Instead, a new method of testing called Worldwide Harmonised Light Vehicles Test Procedure (WLTP) replaces it. The upcoming WLTP method is able to determine a more realistic evaluation of your vehicle's official fuel consumption (mpg), driving range and CO2 emissions (g/km).
As a result, your vehicle's CO2 emission output will change, placing it in a higher tax band to its current rate, causing an increase in the cost of your road fund licence for the first year.
When is VED / Road Tax set to increase?
The change is set to be introduced on 1st April 2021 for Vehicle Excise Duty. Remember, the change will only affect your very first Vehicle Excise Duty payment when you buy and register a new vehicle after these dates.
Why is VED / Road Tax increasing?
The new WLTP method reflects better real driving conditions to provide a more accurate representation of your vehicle's emissions and fuel economy. Unfortunately, the NEDC method of testing has now become outdated and does not provide an accurate interpretation of your vehicle.
What is the 2021 VED / Road Tax increase?
Although some low emissions vehicles will see no change in road tax this year, the greater amount of CO2 emitted by your vehicle will determine how much your Vehicle Excise Duty increases in 2021 (see table below).
Notable changes in 2021 road tax increases are:
Band D increased by £5 (emitting 76-90g of CO2 per km)
Band E-H increased by £10 (emitting 91-150g of CO2 per km)
Band I increased by £25 (emitting 151-170g of CO2 per km)
Band J increased by £40 (emitting 171-190g of CO2 per km)
Band K increased by £55 (emitting 191-225g of CO2 per km)
Band L increased by £80 (emitting 226-255g of CO2 per km)
Band M increased by £110 (emitting 256g and above of CO2 per km)
Benefit-in-Kind tax for company cars isn't set to change in 2021 for petrol and diesel cars (including hybrids), however pure electric cars and hydrogen fuel-cell cars will move into the 1% Benefit-in-Kind category for the 2021/22 tax year.
What Tax Band is my car in?
Of course you're now wondering what this all means for you. Using the table below, you will be able to calculate which tax band your vehicle would be in if you were to buy it after 1st April 2021:
|VED Band||CO2 Emissions (g/km)||First-Year Rate||Second-Year Rate|
|B||1 - 50||£10||£115|
|C||51 - 75||£25||£115|
|D||76 - 90||£115||£115|
|E||91 - 100||
|F||101 - 110||£160||£115|
|G||111 - 130||£180||£115|
|H||131 - 150||£220||£115|
|I||151 - 170||£555||£115|
|J||171 - 190||£895||£115|
|K||191 - 225||£1,335||£115|
|L||226 - 255||£1895||£115|
Thinking of buying a car and want to save some extra money on road tax? Browse our exclusive deals on new cars at Ford, Mazda and Nissan before 1st April 2021.