Big Changes Ahead: Here’s How Much New 2025 Car Tax Bands Will Cost Petrol and Diesel Drivers.H
New car tax changes will see petrol and diesel drivers pay thousands more to use the roads in a major price hike.
New car tax VED rates will come into effect next Spring (Image: Getty)
Petrol and diesel owners are facing staggering car tax changes with some owners set to pay almost £5,500 to use the roads from next Spring.
Chancellor Rachel Reeves has announced changes to first-year Vehicle Excise Duty (VED) tax rates for owners of brand-new vehicles, with hefty increases for those with the most polluting models.
Motorists grabbing the keys to brand new models which pollute more than 255g/km of CO2 will face the biggest rises.
Annual first-year VED rates will double with drivers set to pay out a staggering £5,490 from next April, up from £2,745.
Brand new models emitting between 226-255g/km CO2 will rise from £2,340 to £4,680.
Rachel Reeves has increased the VED differential between combustion and electric cars (Image: Getty)
Meanwhile, modes producing between 191-225g/km CO2 will have fees rise to £3,300, double that of the current £1,650 rate.
Owners of hybrid models will also face the sting as prices will be up to six times higher than current fees.
Those snapping up brand new cars emitting between 51-75g/km of CO2 will increase from £30, or £20 in the case of hybrids, to £135.
Finally, vehicles emitting between 1-50 g/km of CO2 such as most plug-in hybrid models, will pay VED for the very first time.
These cars were exempt from tax charges, but exemptions will come to an end in the Spring.
These owners will have their first-year tax bills increase to £110 in what could be a possible blow to those planning on making the transition anytime soon.
In her Autumn Budget speech last week, Chancellor Rachel Reeves promised to increase the “differential” between petrol, diesel and electric VED rates.
The policy was fleshed out in the Autumn Budget document, where they confirmed the new fees were aimed at encouraging motorists to switch to EVs.
Labour has thrown its support behind new electric vehicles with BiK rates extended and extra funding for infrastructure.
However, there has been some confusion around whether the party has re-committed to its 2030 petrol and diesel car ban rule.
The Autumn Budget reads: “To help drive the transition to electric vehicles (EVs) the government is strengthening incentives to purchase EVs by widening the differentials in Vehicle Excise Duty First Year Rates between EVs and hybrids or internal combustion engine cars.”
