A total of 59 cars from 24 brands, including popular manufacturers such as Ford, BMW and Mercedes, are set to face a £2,745 car tax increase in April 2025. This comes as a result of significant changes in Vehicle Excise Duty (VED) rates announced in the Autumn Budget by Labour.The party has decided to substantially raise first-year VED fees for petrol and diesel models from April 2025.
These are hefty fees paid by owners of brand-new vehicles before they switch to the standard rate.Fees will rise on a sliding scale, with most of the higher tiers seeing fees double from their current 2024 rates. Models producing over 255 g/km of CO2 are set for the highest £2,745 increase, affecting some of the most popular vehicles on the road.This means common mid-market brands such as Ford and Toyota will have some models affected.
BMW, Mercedes and Audi models will also be hit.In addition, high-end vehicles will bear the brunt of the change. Among those set to face the new tax are some models of Porsche, Lotus, Lamborghini and McLaren, reports Lancs Live.Chancellor Rachel Reeves announced at the end of October that drivers of new petrol, diesel and hybrid vehicles would face higher first-year tax rates.
The move is designed to encourage consumers to buy electric vehicles and widen the gap between ‘higher polluting’ vehicles and EVs. The first-year tax figure is calculated based on the amount of carbon dioxide the vehicle produces.
Currently, those opting for electric vehicles (EVs) benefit from paying no Vehicle Excise Duty (VED), while vehicles emitting between 111g and 150g/km of CO2 are hit with a £220 charge, and those exceeding 255g/km face an even heftier first-year fee of £2,745. However, the upcoming changes in April will see EV owners paying a nominal £10 for their first year’s VED—a rate that has been recently frozen, reports Lancs Live.
On the flip side, drivers of petrol, diesel, and hybrid cars are gearing up for a significant hike as these rates are poised to double.
A Treasury spokesperson revealed exclusively to Car Dealer Magazine that by April 2025, purchasing new vehicles like a Ford Puma could result in a doubled first-year VED cost, increasing from £220 to £440. For higher-end models such as a Range Rover, the charge in the first year would escalate from £2,745 to an astonishing £5,490.
Chancellor Rachel Reeves announced during her Budget statement: “To help drive the transition to electric vehicles 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.”
Reeves further stated, “The government is also maintaining EV incentives in the Company Car Tax regime and extending 100% First Year Allowances for zero emission cars and EV charge points for a further year.”
The Budget document elaborated on vehicle taxation, explaining: “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.”
It further outlined plans stating: “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.”
Here is the full lose of cars producing more than 255 g/km of emissions: