Come April 1, 2025, UK motorists driving petrol and diesel cars could be facing a ‘ten-fold’ hike in car tax rates due to major changes in the Vehicle Excise Duty (VED). Nearly all drivers will see increases as standard VED rates are set to rise with inflation, according to Retail Price Index (RPI), but the first-year charges slated for an overhaul will hit the hardest.
Those cars emitting over 76g/km of CO2 will see their costs double starting from April, with highly polluting vehicles potentially incurring thousands more in expenses. More shockingly, vehicles with low CO2 emissions between 1-50g/km are targeted for the steepest percentage increase.
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The RAC, specialists in car insurance and breakdowns, have revealed there’s a ‘ten-fold’ rise on the cards for this category, which includes many hybrid cars equipped with dual electric and combustion engines. Commenting on the specifics, they said: “The biggest news is the ten-fold increase in first-year car tax rates for cars emitting between 1-50g/km of CO2, which includes hybrids.”
Adding: “These will increase from the current rate of £10 for petrol and diesel cars (or zero for hybrids) to £110. The vast majority of plug-in hybrid cars fall into this band.”
Rates for new cars with emissions between 51-75g/km of CO2 will also soar from £30 (or £20 for hybrids) to £135, reports the Express.
This update follows Labour’s confirmation of increased first-year VED fees within Chancellor Rachel Reeves’ Autumn Budget statement.
HM Revenue and Customs has acknowledged that upcoming changes to Vehicle Excise Duty (VED) rates will “widen the difference” between petrol, diesel, and electric vehicles. They also highlighted that these adjustments would align hybrid vehicles more closely with higher emitting cars.
They explained: “Vehicle Excise Duty first-year rates are paid for the first year of a car’s lifecycle, at the point of registration, and vary based on emissions.”
They added, “From 1 April 2025, the Vehicle Excise Duty first-year rates will be changed to widen the difference between zero-emission, hybrid and internal combustion engine cars.”
Clarifying further, they stated, “From 1 April 2025, zero-emission cars will pay the lowest first-year rate. Rates for cars with CO2 emissions of 1 to 50 grams per kilometre and 51 to 75 grams per kilometre, including hybrid vehicles, will increase to bring them closer to higher emitting cars.”