Road tax for car drivers is set to rise by 13.4% in line with the retail price index (RPI) from 1 April 2023
The Budget confirmed plans to increase vehicle excise duty (VED) from 1 April by the rate of RPI for cars, vans and motorbikes while rates for HGVs will be frozen for the next year.
For most drivers road tax now starts at £120 a year for cars producing 76-90/km ranging up to £585 (151-170g/km).
The lowest polluting cars that produce 0-75g/km of CO2 will pay the same tax they did in 2021, ranging from zero to £25. There are different rates for cars registered after April 2017.
Legislation will be introduced in Spring Finance Bill 2023 to amend the rates for cars, vans and motorcycles.
Following consultation in 2022, the government will reform the HGV levy from August 2023 following the end of the current levy suspension period.
The reforms to the HGV levy is a further step towards reflecting the environmental performance of the vehicle, focusing more on air quality emissions and levels of CO2 emissions.
For foreign-registered vehicles, the reforms also ensure that the levy is focused on road usage and that it is more clearly aligned with the government’s international obligations.
The reformed levy will be legislated for in Finance Bill 2023 and will take effect from 1 August 2023 following the end of the suspension period for the existing levy in August 2020.
In addition, around £8.8bn is being set aside for a second round of City Region Sustainable Transport Settlements. This will help to develop mass transit networks and sustainable transport options across England’s city regions.