Some drivers are set to be hit with a huge £2,745 road tax rise next April. In the recent Budget, Chancellor Rachel Reeves increased a vital tax on new cars. Known officially as Vehicle Excise Duty (VED), new car buyers pay a rate based on the carbon footprint of their vehicle before moving to a standard flat rate, which currently is £190 per year.
Electric vehicles will be subject to tax from April 2025. But according to the Government's Budget papers, the cost of taxing petrol, diesel, and hybrid models will also increase significantly. It said: "The Government will change the VED First Year rates for new cars registered on or after April 1 2025 to strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars.
" READ MORE: British Gas customers can get up to £2,000 off energy bills - how to apply Don't miss the biggest and breaking stories by signing up to the BirminghamLive newsletter here . From April 1, 2025, the cheapest new vehicles to tax will be zero-emission models. This will include EVs and some plug-in hybrids, Express reports.
The first-year rate will be £10. But many petrol and diesel tax bands are set to double next year, with small, clean hatchbacks that make between 76 to 90/km of CO2 subject to a £270 charge, up from £135. Drivers set to be hit hardest by the tax increase will be buyers of new luxury and performance models which produce more than 2.