Motorists travelling in some of the most polluting vehicles on the road will face the highest car tax rise from April 2025. Standard Vehicle Excise Duty (VED) rates rise every spring in line with Retail Price Index (RPI) inflation but first-year rates will also increase this year. Labour Chancellor Rachel Reeves confirmed the move in the Autumn Budget with updates coming into effect on April 1, 2025.
The move will see first-year rates double for most newly registered petrol and diesel cars on a sliding scale. Vehicles emitting over 255g/km of CO2 will be most affected by the rule change with thousands of pounds to be added to total bills. Under the update, annual first-year VED fees for these road users will rise from £2,745 per year to £5,490.
The £2,745 increase for these road users is the biggest financial increase of any motorist this spring and could leave many prospective buyers rethinking their plans. According to HM Revenue and Customs , the new rules are being introduced to “widen the difference” between electric vehicles and petrol and diesel cars. They have previously 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.
“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. "From 1 April 2025, zero-emission cars will pay the lowest first-.
