New car tax rules are coming next year, which could make driving a lot more pricey for some.
The Treasury has confirmed amendments arriving next spring, leaving motorists only a few months to prepare.
Here is everything we know about the car tax changes.
What are the car tax changes?
The VED is a tax on vehicle ownership and the amount you have to pay depends on your vehicle type and when it was first registered.
These rates are set to increase next year and will vary depending on the type of emissions your car emits.
Drivers of electric and low-emission cars, vans and motorcycles will need to pay vehicle taxes just like drivers of petrol and diesel vehicles. This change will apply to both new and existing cars.
This new measure removes band A under the existing VED system and owners of vehicles in this band will be required to move to the first band, where a rate becomes payable.
How much will I pay on car tax from 2025?
Zero-emission cars will pay the lowest first-year rate of just £10, while the rate for cars emitting 1-50g/km of CO2, including hybrid vehicles, will increase to £110 per year.
For vehicles emitting 51-75g/km of CO2, rates will rise to £130, while other rates for cars emitting 76g/km and above will double from their current level.
What has the Government said?
It said the changes will affect cars, vans, motorcycles and motorcycle trade licence holders.
A spokesman said: “This measure will up-rate the Vehicle Excise Duty standard rates for cars, vans, motorcycles and motorcycle trade licences (excluding the first-year rates for cars) by the Retail Price Index, and will reflect the inclusion of zero-emission vehicles in Vehicle Excise Duty from 1 April 2025.
“This is a standard uprating to come into effect from 1 April 2025.
“Increasing Vehicle Excise Duty rates by Retail Price Index in 2025 to 2026 will ensure that Vehicle Excise Duty receipts are maintained in real terms.”
Critics argue that the affordability of electric vehicles remains a major barrier for many drivers. They said the car tax changes will hit the poorest the hardest.
The availability of car charging points, particularly in rural areas, has also been a factor.
The Government has attempted to quell these concerns by pledging to accelerate the rollout of EV charging points. Fuel duty is also set to remain frozen, and the temporary 5p cut in fuel prices has been extended for another year.
When will the changes come into force?
The Government has said they will come into force on April 1 2025. Visit the Government website for more information.
