British drivers are being warned of new car tax changes launching this year which could see them slapped with a bill worth almost £5,500.
As 2025 gets underway, motorists will be preparing for the new financial year in April when new rules will be introduced to bolster the system of Vehicle Excise Duty (VED).
Chancellor Rachel Reeves announced in the Autumn Budget that a number of car tax changes would be introduced as the Labour Government attempts to fill a £22billion funding gap left by the previous Conservative administration.
She also unveiled plans to “widen the differentials” in VED first year rates between zero emission vehicles and hybrids or internal combustion engine vehicles.
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New Vehicle Excise Duty rules will be rolled out on April 1, 2025
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From April 1, 2025, the Government will change VED first year rates for new cars registered on or after the deadline to promote the sale of electric vehicles.
Zero emission cars, which include battery electric and hydrogen fuel cell vehicles, will pay the lowest first year rate at just £10 until the 2029-2030 tax year.
Rates for cars emitting between one and 50g of CO2 per kilometre, including hybrids, will increase to £110 for 2025-26. Cars emitting 51-75g/km will rise to £130.
However, in a major step change to the system of Vehicle Excise Duty, all other rates for cars emitting 76g/km and above will double from their current level for 2025-26.
For drivers purchasing new vehicles after April 1, car tax hikes could see them pay as much as £5,490 for larger petrol and diesel vehicles, under current plans.
It was also announced that the Government would uprate standard VED rates for cars, vans and motorcycles, excluding first year rates for cars, in line with the Retail Price Index (RPI) from April 1, 2025.
April 1 is also the first day of charges for electric vehicles with owners having to start paying Vehicle Excise Duty following a declaration from former Chancellor Jeremy Hunt to make the VED system “fairer” for all drivers.
Ahead of the new changes, motorists are being warned to be aware of the price hikes, or they could be slapped with enormous costs in months.
Current first year car tax rates compared to expected 2025-26 hikes
0g/km – £0 will rise to £10
1 to 50g/km – £10 will rise to £110
51 to 75g/km – £30 will rise to £130
76 to 90g/km – £135 will rise to £270
91 to 100g/km – £175 will rise to £350
101 to 110g/km – £195 will rise to £390
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Electric cars will have to pay Vehicle Excise Duty for the first time from April 1, 2025
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111 to 130g/km – £220 will rise to £440
131 to 150g/km – £270 will rise to £540
151 to 170g/km – £680 will rise to £1,360
171 to 190g/km – £1,095 will rise to £2,190
191 to 225g/km – £1,650 will rise to £3,300
226 to 255g/km – £2,340 will rise to £4,680
Over 255g/km – £2,745 will rise to £5,490
