Confusing tax rates

▶ Vehicle Excise Duty as it is official called – although GOV.UK do refer to it as Vehicle Tax – has risen during 2021, though only in certain sectors.

I tend to use the monthly direct debit option to pay for road tax (that’s what I call it) as to me it feels like it’s not costing too much... However, I’ve just worked it out that to cover all the cars in my name that are currently roadworthy it is nearly £200 a month. That’s a lot of hard-earned cash wasting away on vehicles, of which some, hardly move from one month to the next. I could SORN one or two I guess – and I do have three cars on SORN currently.

I will have to sell a few during 2022. I don’t mind paying £2.62 a month on one car – there’s no need to panic about selling that one, but the three Audis

I tax cost me £80 a month in VED.

Fortunately, for those of us that run older, higher polluting CO2 vehicles, there’s a clause in the tax rates that gives cars producing over 225g/km a lower rate if the vehicle was registered before March 23, 2006 – this helps keep my Audi A8 (producing 265g/km) in the £340 a year bracket instead of the top rate of £600.

If you have the money for a newer model, then road tax rates can be more favourable. I checked out a March 2017 Audi A6 the other day. It was debadged and I found it was running the 3.0-litre TDI engine – with a road tax rate of just £30 a year! Wow, that does seem generous. Audi have managed to get the CO2 output down to 114g/km.

Some petrol models registered after March 23, 2006 are cheaper to buy than those registered before. During 2022 we are looking at a Mercedes-benz SLK project car – a R171 350 to be precise. Lovely, fast cars to drive that have become a modern classic. However, I’m only looking at SLKS prior to March 23, 2006 – as these command a £340 per year rate instead of £585 for a newer model.

For new cars today, road tax rates look great on paper for the first year, on models producing a CO2 of between zero and 100g/km, but from the second year onwards the rates rise to £155 per annum across the board. Those over 101g/km will get a reduction in road tax from the second year. For new models with a £40,000 or more list price, a different pay structure comes into force from year two to year six – you will be charged £490 per annum instead of £155.

How do you think road tax rates will go leading up to 2030? Up I guess, but do you think older diesels will be taxed off the road? Will more larger towns introduce Clean Air Zones to stop the higher polluting cars from entering (unless you pay a daily charge, of course!)?