Car owners across the UK could be facing a significant hike in taxes in the coming months, with potential costs per driver reaching as high as £5,490. The government’s sweeping changes aimed at reducing emissions will see motorists shouldering heavier tax burdens.
Tax specialists are urging car users to ‘be prepared’, advising them to plan their finances ahead of time. Tax experts at TaxNatives have sounded the alarm that come April, owners of petrol, diesel, and even electric vehicles can expect to be hit by heightened charges following thorough revisions to the Vehicle Excise Duty (VED) system.
A looming increase in the standard VED rate is on the horizon, and it’s clear that more environmentally friendly electric and hybrid cars will not be spared from the uptick in rates. The most notable hike is anticipated in the first-year VED rates for vehicles with high emissions, which are predicted to skyrocket, impacting the majority of drivers in just a few short months.
TaxNatives’ investigation suggests that these impending alterations have the potential to generate a hefty £162.9 million in additional tax revenue alone in the initial six months of 2025. Average costs for new vehicles are poised to surge by about £418 on average, delivering a heavy blow to the wallets of those affected, reports Devon Live.
Andy Wood from TaxNatives commented: “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.”
He warned: “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.”
In a move set to significantly affect many motorists, first-year Vehicle Excise Duty (VED) rates are on course to double for numerous drivers, which could add thousands to the overall costs for some. Notably, for cars emitting over 255 g/km of CO2, there will be a striking charge of £5,490 to use the roads in the tax year 2025/26, as highlighted by the Express.
This steep increase from the current £2,745 fee aligns with the government’s intent to boost the adoption of electric vehicles (EVs) by hiking fees. Diesel car owners appear to be in for the steepest climb, with a projected average bump of £1,113 per vehicle, according to research by GoCompare.
Petrol car purchasers aren’t spared either—faced with an extra collective tax total of £89.4 million, averaging out to an additional £503 per car following the impending update. Insurance expert from GoCompare, Tom Banks, alerted car buyers: “The increased VED rates mean most new car buyers will be paying a lot more than they were expecting in 2025.”
Banks also offered advice for those looking to mitigate these rises, suggesting leaning towards a low-emissions vehicle to benefit from lower tax bands.
He further advised: “If you can’t purchase a suitable hybrid or EV, consider opting for a nearly new vehicle instead. This gives you that new car feeling for a fraction of the price, and will allow you to dodge the increased tax.”