New car tax changes which were introduced earlier this month could set drivers back up to £5,500 per year. Vehicle Excise Duty (VED) updates came into effect from April 1, 2025 with major updates affecting petrol, diesel and electric vehicles.
Standard VED rates increased in line with Retail Price Index (RPI) inflation with bills up from £190 to £195 per year. Electric car owners were also deeply affected with owners hit with VED charges for the very first time. However, the most dramatic tax updates affected first-year rates on petrol and diesel with many charges doubled.
Charges also rise based on how much pollutants vehicles emit with the dirtiest models paying the highest fees.
It means those securing brand new vehicles emitting over 255g/km of CO2 are most affected, with bills jumping up from £2,745 in year one to £5,490.
Slightly less polluting models emitting between 226 and 255g/km of CO2 will also be forced to pay £4,680, up from the previous figure of £2,340.
Vehicles producing between 191 and 225g/km will pay £3,300 on the first year on the roads, a rise on the £1,650 previously paid.
Meanwhile, those securing the keys to brand new electric car owners will pay just £10 in first-year VED fees.
Officials at HM Revenue and Customs confirmed that the move was intended to “widen the difference” between EVs and combustion vehicles.
HMRC said: “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.”
To avoid being caught out, road users should make sure to check vehicle emissions before completing a sale.
To look up the emissions of a new vehicle, motorists can ask to look inside the V5C (vehicle registration document).
However, this information should also be clearly presented on the labels next to the vehicles in showrooms.
Meanwhile, emissions information can also be accessed through free online checkers through sites such as WeBuyAnyCar.