Many Britons are unaware of new car tax changes launching in April despite the threat of them potentially having to fork out thousands of pounds in extra costs.
Chancellor Rachel Reeves unveiled a raft of new measures for Vehicle Excise Duty (VED) to ensure all motorists are paying a fair share to use the roads.
The largest change was to "widen the differentials" between electric cars and internal combustion engine vehicles, with a huge hike in first year VED rates.
Electric vehicles will have a first year rate of just £10 until 2029-30, while rates will be hiked for petrol and diesel cars and hybrids emitting between one and 50g/km of CO2 to £110.
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Drivers have been issued an urgent warning of impending car tax changes launching in April
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All other rates for cars emitting 76/km of CO2 and above will double from their current level for 2025-26, which could see some motorists and businesses pay as much as £5,490.
Electric vehicles will also need to start paying Vehicle Excise Duty from April 1, 2025, as announced by former Chancellor Jeremy Hunt in the 2022 Autumn Statement.
The Association of Fleet Professionals is also warning that many electric vehicles registered after April 1, 2025, will need to pay the "luxury car tax" or Expensive Car Supplement.
This applies to vehicles with a market price of more than £40,000 and costs £425 a year for the first five years from the start of the second licence.
James Pestell, director of the AFP, warned that businesses could face "substantial" costs when applied across entire fleets, which could include hundreds or even thousands of electric vehicles and plug-in hybrids.
He said: "The feedback we are receiving is that many fleets simply haven't appreciated and accounted for these increases.
"From April onwards, they'll be receiving bills from the DVLA or shortfall invoices from their leasing supplier, and won't have factored them into their running costs."
Pestell reiterated the concerns around the looming car tax deadline at the start of April as a reason for the AFP highlighting the issue now.
He also warned that when taking all of the new car tax changes into account, electric vehicle owners could see a huge jump in their total expenses.
Pestell continued, saying: "Electric cars costing over £40,000 bought after the start of April - including some of the most common models on fleets - that would have attracted no tax in 2024-25 will be liable for £2,490 during the first five years of their life. That's a big increase."
The rate of VED will be uprated for cars, vans and motorcycles, excluding first year rates, in line with the Retail Price Index from April 1, 2025.
The Government acknowledged that the Expensive Car Supplement has a "disproportionate impact" on those looking to purchase zero emission cars.
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The Vehicle Excise Duty rate for heavy goods vehicles will rise in line with inflation from April
PAHowever, it said it would only consider raising the threshold for electric vehicles "only at a future fiscal event" to make it easier for more motorists to invest in a clean vehicle.
The Government will also uprate Heavy Goods Vehicle VED rates and the HGV levy in line with RPI from the same April deadline.
