Car tax: millions of UK drivers to be hit with increase from April 2024

Millions of UK drivers will see another car tax rise from April 2024 - and this will particularly affect owners of older vehicles after HMRC confirmed the new Vehicle Excise Duty (VED) charges will be based on Retail Price Index (RPI) inflation from the spring.

The VED will depend on the age of your car, as well as the type of fuel it uses, CO2 emissions and list price and this will determine how much tax will need to be paid. For new cars, there will be a first-year rate followed by a flat annual rate applied from the second year onwards. Car tax can be paid monthly, every six months, or in one annual payment.

Pete Barden, motoring journalist, said this means fees will likely rise by less than 6%, and cars and vans registered before March 2001 could see their yearly costs rise from £200 to £210 if they have an engine size of 1549cc and under.

But for vehicles with engines larger than 1549cc, their annual charges are predicted to jump from £325 to £345 which only comes a year after car taxes experienced a £20 surge from £180 to £200 between the years 2022-23 to 2023-24.

HMRC said: "Increasing VED rates by RPI in tax year 2024 to 2025 will ensure that VED receipts are maintained in real terms and that motorists make a fair contribution to the public finances. The government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2024 in the Autumn Finance Bill 2023. To support the haulage sector, VED for HGVs and the HGV levy will both remain at 2023-24 rates for 2024-25."