New car tax bands set to increase fees for all petrol and diesel owners

Some motorists will pay thousands more from next Spring (Image: Getty)

and owners face jaw-dropping in just a matter of weeks with major updates to rates in the pipeline. 

Standard rates are likely to rise with Retail Price Index (RPI) inflation next Spring as per usual.

However, unlike in previous years, first-year with thousands set to be added to motorists’ bills.

The updates mean some individuals will pay almost £5,500 per year to get behind the wheel in a dramatic rise. 

The new rules will target the most polluting owners with petrol and diesel owners emitting the highest pollution rates most affected. 

busy road

Petrol and diesel owners are most affected by the changes (Image: Getty)

First-year VED rates for will rise from £2,745 to £5,490 in a staggering rise. 

However, that’s not the only sizeable increase with on a sliding scale. 

Vehicles emitting between 226-255g/km of CO2 will rise from £2,340 to £4,680. 

Models producing anywhere between 191-225g/km CO2 will now pay £3,300 in the first year, double the current £1,650 fee. 

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electric car charge

EV owners will pay VED for the first time in 2025 (Image: Getty)

Even motorists emitting a much smaller amount of emissions will feel the sting under the new crackdown. 

Those snapping up brand new cars emitting between 51-75g/km of CO2, including many hybrid models, could pay six times more.

Under the updates, motorists will see their first-year rates rise from around £20 to £135 per annum. 

Electric cars for the very first time as years of securing exemptions finally come to an end. 

But, the Government has only introduced a £10 first-year tax rate for zero-emission vehicles in a bid to incentivise the take up of models. 

The sudden rise in first-year VED tax rates was announced in Rachel Reeves’ Autumn Budget statement last month.

The Autumn Budget reads: “To help drive the transition to electric vehicles (EVs) the government is strengthening incentives to purchase EVs by widening the differentials in Vehicle Excise Duty First Year Rates between EVs and hybrids or internal combustion engine cars.”

Treasury estimates have claimed increasing first-year rates will generate around £15million extra in the 2024/25 financial year.

However, the policy is expected to boost revenues by £415million next year and£410million between 2026/27. 

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