Drivers of these cars could be set for average £418 vehicle tax increase in 2025
Owners of brand-new petrol, diesel and electric vehicles are set to be hit by staggering car tax rises in weeks.
Motorists behind the wheel of brand-new cars face hefty car tax increases in April due to planned Vehicle Excise Duty (VED) increases. The updates are introducing higher fees for all new vehicle owners with many rates doubling.
Those with the keys to the most polluting petrol and diesel models will see year-one VED rates increase from £2,745 to £5,490. Meanwhile, electric car owners will also feel the sting of a VED charge for the first time albeit at a much lower £10 annual fee. Analysis from experts at Tax Natives have suggested on average owners of new vehicles could be up to £418 worse off as a result of the new rules.
Andy Wood, spokesperson for Tax Natives explained the new fees "aren’t small increases" with road users likely to feel the impact.
He said: "The rise in Vehicle Excise Duty (VED) rates is part of the government’s plan to cut emissions, but it’s also adding financial pressure on drivers.
"If you’re buying a new petrol or diesel car – especially a higher-emission model – be prepared for a bigger hit to your wallet. These aren’t small increases; they’re significant costs you’ll need to budget for.
"Even electric vehicle (EV) owners, who’ve enjoyed years of tax breaks, will now see charges. While the initial £10 VED for EVs is still low, it’s clear this is just the beginning of more taxes for EVs in the future."
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The changes to first-year VED fees were announced by Chancellor Rachel Reeves in her Autumn Budget statement.
According to HM Revenue and Customs, the scheme is set to generate an extra £415million in revenue over 2025/26.
This will fall year-on-year as more motorists switch to cleaner eclectic and hybrid models which come with lower VED fees.
The Treasury is predicting to make an additional £410million between 2026/27 and an extra £370million between 2027/28.
Andy stressed road users should make sure to plan ahead of the April update to avoid being caught out.
He added: "With these changes on the horizon, planning ahead is key. Taking the time to understand how these new rates will affect your finances now will make sure you’re ready when they kick in."
