Car tax changes: Will VED rise again in 2021?

Martin Lewis gives money-saving advice on VED car tax

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Rishi Sunak will unveil his spring budget next month on March 3. Already the subject of fervent discussion, the budget will outline how the Chancellor intends to allocate spending for the year ahead. People can expect an update on the Covid safety nets keeping them afloat and potential VED changes.

Will VED rise again in 2021?

VED is subject to occasional price hikes in the UK, the most recent of which Mr Sunak announced with his 2020 budget.

Then, rates increased by a maximum of £10 for the most polluting models.

The changes last year now have people anticipating the same for 2021.

Experts believe VED costs will rise again this year, following the year-on-year trend.

Generally, they increase with inflation, which as of January 2021 was 0.7 percent.

According to Carwow, a new and used car buying platform, petrol and diesel vehicles may set people back up to £155 per year in 2021.

Alternative-fuel vehicles which use bioethanol or LPG liquid petroleum gas could cost slightly less at £145.

But people will have to wait for an official confirmation of these figures in March.

While some car owners may see a slight adjustment in their rates, others likely won’t see a difference.

Electric-only and hydrogen fuel cell cars are exempt from the tax and will likely remain that way.

One change to come in 2021 is to the Ultra Low Emission Zone (ULEZ).

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The ULEZ, which replaced the T-charge in 2019, covers the same area as the Congestion Charge and operates 24/7.

Transport for London (TfL) will expand the area in 2021 to include areas outside of central London.

The current plans will see it spread to cover areas within the North and South Circular.

Drivers within the expansion will have to meet emission standards or pay a daily charge.

TfL adjusts the charges depending on the types of vehicle people own.

The prices for travelling within the ULEZ work as follows:

£12.50 for including cars, motorcycles and vans (up to and including 3.5 tonnes)

£100 for heavy vehicles, including lorries (over 3.5 tonnes), buses and coaches (over five tonnes)

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