Motorists are bracing for a significant tax raid within months – and some drivers will pay £5,490. Wide-ranging government changes to reduce emissions are set to leave car users facing bigger tax bills.
And tax specialists are warning them to ‘be prepared’ – saying people will need to budget in advance. Tax specialists at TaxNatives have issued a warning that petrol, diesel, and electric vehicles will all be subject to higher charges from April due to comprehensive updates to the VED system.
A scheduled rise in the standard VED rate is on the horizon, and even eco-friendlier electric and hybrid vehicles won’t escape increased rates. The most substantial change, however, is the first-year VED rates for high-polluting cars, which are set to soar, affecting nearly every motorist within months.
TaxNatives’ analysis forecasts these changes could generate an additional £162.9 million in tax revenue in just the first half of 2025. This could mean drivers paying an average of £418 more for new vehicles, dealing a significant blow to their finances.
Andy Wood from TaxNatives remarked: “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 cautioned: “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.”
First-year VED rates will double for many, with some road users facing thousands added to their total bills. Cars emitting over 255 g/km of CO2 will see a £5,490 fee to use the roads in the 2025/26 tax year, reports the Express.
The current fee of £2,745 is set to rise as the government plans to dramatically increase fees to encourage more people to switch to electric vehicles (EVs). A study by GoCompare revealed that diesel car owners will be most affected, with an average increase of £1,113 per vehicle.
Petrol car buyers will spend an additional £89.4 million in tax overall, averaging an extra £503 per car under the new update. Tom Banks, a car insurance expert at GoCompare, warned: “The increased VED rates mean most new car buyers will be paying a lot more than they were expecting in 2025.”
He suggested considering a low-emissions car to fall into cheaper tax bands and added: “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.”