Meanwhile, older vehicles will also pay more to use the roads in one of the biggest VED updates in recent years.
Standard rate
Every year, the standard VED fee rises with RPI inflation and 2025 is set to be no different. Experts have already suggested that fees will rise by £5 per annum with total costs increasing from £190 to £195 per annum.
HMRC confirmed that the rise would generate no extra revenue in real terms as it’s simply an inflationary rise.
But they accepted the cost would have an impact on road users, including motorists with petrol and diesel vehicles.
Cars built between 2001 and 2017 have VED worked out solely in emissions rates instead of a standard flat fee with rises at each level within months.
Cars producing over 255g.km of CO2 will pay £760 per year in 2025 instead of the current £735 charge.
First-year VED fees
At the Autumn Budget, Labour confirmed they would tweak first-year VED tax fees with owners of some of the most polluting brand new cars set to feel the sting.
The updates mean models emitting over 255g/km of CO2 will pay £2,745 more from April 2025 with bills rising to £5,490 for the first 12 months.
Cars emitting between 226 and 255g.km of CO2 will also feel the sting with rates up from £2,340 to £4,680.
In comparison, new electric cars will pay just £10 in their first-year on the road with the new policy creating a massive difference between fuel types.
Older vehicles
Motorists behind the wheel of older cars registered before March 2001 are also impacted by the rise.
These models have tax rates determined by engine capacity instead of emissions with fees set to rise across the board.
Specialists at Pete Barden have confirmed those with engines above 1,549cc will see price increases of £20 from £325 to £345 per year.
Meanwhile, those producing 1,549cc or more will pay £10 more with tax rates up from £200 to £210.
