New van buyers will spend an average of £1,732 extra – up to as much as £1,807 – on Vehicle Excise Duty (VED) from April, a new study has found. In total, van drivers will pay an additional £15.5 million over the first six months of the new tax year, if 2024 sales patterns continue.
The chancellor announced an increase in VED first-year rates, also known as ‘showroom tax’, in last year’s Autumn Budget. Drivers planning to purchase a new van after April may need to adjust their plans or face a hefty tax increase.
That’s according to experts at Go.Compare van insurance, who calculated the figures. The comparison site analysed data from the Department for Transport, reviewing privately owned van registrations in the first half of the 2024 tax year. It then applied the current and upcoming first-year VED rates to estimate how much more van buyers could pay in the approaching financial year, if consumer habits stay the same.
The study says that buying new diesel vans will result in the heaviest hit from the rise, as rates are based on a vehicle’s CO2 output. The emissions from diesel vans often place them in the top bands for VED. As a result, buyers could see a sharp average increase of £1,807 per vehicle in the first half of the 2025/26 financial year.
In total, new diesel van owners will spend an extra £14.2 million in tax during this period if sales from last year are matched. An additional £1.2 million will come from new petrol van purchases, the second highest rise of any fuel type. This equates to an average of £1,354 more per petrol van.
The increase will be much lower for those who choose greener vans. Buyers who opt for a hybrid will only pay an extra £252 towards the tax, over £1,500 less than diesel van drivers, while those who choose an electric van will spend just £10 more.
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Extra cost of first-year VED rates for new van buyers from April to September 2025, by fuel type |
Tom Banks, one of the motoring experts at Go.Compare, said: “The increased VED rates will result in a big hit if you buy a brand new van later this year, but there are things you can do to absorb the blow. The tax rates are based on CO2 emissions, so if you’re able to, this is a good time to switch to a van using cleaner fuels in the cheaper tax bands.
“If you can’t buy a suitable hybrid or electric van, you could go for a ‘nearly new’ one instead. This lets you enjoy a vehicle that’s pretty much as good as new without breaking the bank, and means you can dodge the increased tax.
“Failing this, see if there are any other ways you can reduce your motoring spending to counteract the higher tax. Comparing van insurance policies might help you find a provider offering the same amount of protection for less, and finding new ways to maximise your fuel economy could help to cut costs further.”
About the data
The increase in Vehicle Excise Duty (VED) new van buyers will pay in the first six months of the 2025 tax year due to the rise in first-year rates is based on DVLA and Department for Transport (DfT) data. First, Go.Compare took DfT figures on the number of light goods vehicles initially registered in the first half of 2024, split by local authority area, fuel type and CO2 band. Only privately owned vans were considered in the figures, meaning those belonging to large fleets were not included.
Using DVLA information, the first-year rate that would have to be paid for each group of light goods vehicles based on their CO2 band was applied. Then, for each band, the number of vans was multiplied by its first-year fee, giving an estimate of the total for all vans in each band. These were then totalled to estimate the amount payable for all new light goods vehicles in the first half of the 2024 tax year.
The researchers then repeated this process using the band fees for 2025 (sourced from Parkers) and took the difference between the 2024 and 2025 numbers. This gave an estimate of the total extra amount that would be spent on this tax in the first half of the 2025 tax year (April to September) if new van registrations remain the same in this period.
The figure was divided by the number of new light goods vehicles to determine the extra fee per van. The data was then split by fuel type and local authority area to project the extra tax that will be paid by owners of light goods vehicles from each fuel type and area during this period, should new van registrations stay the same.
These figures were also divided by the number of new light goods vehicles to determine the extra fee per van for each location and fuel type. The following places were omitted from the regional results due to a low sample size (below 10): Clackmannanshire, Orkney Islands, Na h-Eileanan Siar (Outer Hebrides), Dundee City, Torfaen, West Dunbartonshire, East Renfrewshire, Reading, Hartlepool, Blaenau Gwent, Slough and the Isles of Scilly.