Petrol and diesel vehicle owners to be hit with 'ten-fold' car tax increase within months

Owners of petrol and diesel vehicles are set to be hit with a 'ten-fold' increase in car tax charges from this spring, dealing a significant blow to some combustion engine drivers. Vehicle Excise Duty (VED) rates will see a rise from April 1, 2025, affecting nearly all motorists with substantial hikes.

While standard rates will go up in line with Retail Price Index (RPI) inflation, the first-year rates will undergo more pronounced changes. Vehicles emitting over 76g/km of CO2 will have their costs doubled from April, with the most polluting facing thousands of pounds in additional charges.

However, it's the low-emitting models, those producing between 1-50g/km of CO2, that will experience the largest percentage increase. The RAC, experts in car insurance and breakdown services, have indicated that owners of such vehicles, including many hybrids, are looking at a 'ten-fold' rise.

They stated: "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. 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 emitting between 51-75g/km of CO2 will increase from £30 (or £20 for hybrids) to £135." The Labour party has acknowledged that these first-year VED costs will indeed go up in 2025, as announced in Chancellor Rachel Reeves' Autumn Budget statement.

HM Revenue and Customs has acknowledged that upcoming changes will accentuate the differences in Vehicle Excise Duty (VED) rates between petrol, diesel and electric vehicles while aligning hybrids more with higher-emitting cars. They stated: "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."

Explaining the forthcoming adjustments, they noted: "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."

They further clarified: "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."