Millions of drivers face 'substantial' car tax hike tomorrow after Rachel Reeves's unexpected announcement

WATCH: Rachel Reeves announces new car tax measures

GB NEWS
Felix Reeves

By Felix Reeves


Published: 31/03/2025

- 13:27

'If you're set on a new vehicle, consider a low-emissions car, as that will place you in the cheaper tax bands'

Millions of drivers could be slapped with a massive car tax hike since they are unaware of the new changes being introduced tomorrow.

New research has found that almost half of all motorists do not know about the new first year rates for Vehicle Excise Duty launching on April 1.


Just 48 per cent of people know about the Government's changes to first year rates, which were unveiled by Chancellor Rachel Reeves in October's Autumn Statement.

The new changes are being introduced to "strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars".

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DVLA vehicle tax reminder

New VED first year rate changes will be introduced tomorrow

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From April, any newly registered zero emission cars will pay the lowest first year rate of £10, which will stay in place until 2029-2030.

Rates for cars emitting 1-50g/km of CO2, including hybrids, will rise to £110, while those emitting between 51 and 75g/km will pay £130.

All other cars emitting 76/km and above will see current first year rates double for 2025-26. While this could result in some motorists paying only hundreds of pounds more, others could fork out thousands.

The most polluting petrol and diesel vehicles - namely those which emit more than 255g/km - will see rates double to a staggering £5,490.

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According to research from Go.Compare Car insurance, an estimated 21.2 million drivers are unaware of the changes set to be rolled out from April 1.

If 2024 buying habits were to continue this year, drivers will purchase almost 200,000 new cars without realising that extra tax is involved.

This could be devastating for some drivers, who will fork out an estimated £83.5million in additional tax payments.

Tom Banks, car insurance expert at Go.Compare, said: "The increase in first-year rates for VED could mean a substantial tax rise for anyone who decides to buy a new car this year.

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"It's imperative that drivers are aware of this before they head to the showroom, or they could end up choosing a car that comes with a tax bill that they can't afford."

Younger people were found to be least aware of the car tax changes, with less than a quarter aware of the charges launching tomorrow.

In comparison, older motorists had the highest awareness, with almost two-thirds of those over the age of 60 knowing about the amended first year rates.

Banks added: "The increases apply to new cars and are based on CO2 output, so if you want to avoid them altogether, buy a 'nearly new' car that's just a few years old instead.

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Car tax warning letter

A number of crucial car tax changes are being introduced on April 1

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"Or, if you're set on a new vehicle, consider a low-emissions car, as that will place you in the cheaper tax bands."

The expert called on drivers to cut their overall motoring costs if they are to be hit with additional car tax charges, including shopping around for their car insurance.