Drivers could be facing higher costs to encourage greener motoring

MOTORING costs could increase as the Government plans to lessen the environmental impact of vehicles.

Included in these plans is a new tax specifically targeting new petrol and diesel owners to try to reduce carbon emissions.

Nationwide Vehicle Contracts has predicted what it could mean for motorists over the next 12 months.

INCREASING VEHICLE EXCISE DUTY

Vehicle excise duty normally rises with inflation, which as of January was 0.7%. If this year’s rise repeats last year’s, we could see an increase of up to £10 for older vehicles.

FUEL DUTY RISE

The Prime Minister may have promised he had “no intention” to raise fuel duty ahead of his election in 2019, but there are rumours that he may renege on his promise and fuel duty could rise between 1-2p.

Without a rise since 2011, it is estimated that it has cost the Treasury £100 billion to keep fuel duty the same. The predicted rise could raise £250 to £470 million.

These measures would impact low-income drivers the most, with the poorest 10% of motorists spending proportionately twice as much of their disposable income on fuel as wealthier groups.

PURCHASE TAX ON NEW PETROL AND DIESEL VEHICLES

The UK Energy Research Centre have proposed a new purchase tax specifically targeted at new petrol and diesel owners.

The tax is designed to encourage people to purchase eco-friendly vehicles as they would cost less tax.

The tax would affect those buying vehicles that emit more than 225gCO2/km. These drivers would be made to pay 50% purchase tax from this year, which would then increase year by year until only electric vehicles were exempt.

‘PAY PER MILE’ ROAD PRICING TO REPLACE VED?

It is understood the Chancellor is considering scrapping VED and fuel duty costs in order to introduce a ‘pay per mile’ road pricing charge.

This would see drivers pay based on how many miles they drive rather than fuel type.

‘BENEFIT IN KIND’ RATES RETURN

As of April, drivers may have to pay as much as £390 per year to use their vehicles due to Benefit in Kind’s reintroduction.

Despite this, BiK rates are still way below what they were in 2019 when they were at 16%.

LOCAL CLEAN AIR ZONE CHARGES

A glimpse into the future? There are a number of local clean air zone charges being rolled out, which could spread across the nation.