Rachel Reeves's tax hikes will see drivers slapped with £5,490 bill when buying new petrol and diesel cars

Felix Reeves

By Felix Reeves

Published: 02/04/2025

- 10:54

Drivers are being warned of massive car tax bills they could face in the near future if they buy popular petrol or diesel vehicles.

As of Tuesday, April 1, new car tax measures were introduced following an announcement by Chancellor Rachel Reeves in October's Autumn Statement.

The Labour MP for Leeds West and Pudsey said the Government would be changing the Vehicle Excise Duty (VED) first year rate to boost interest in electric cars.

She said the measures would "strengthen incentives to purchase" zero emission cars by "widening the differentials" between EVs and internal combustion engine cars.

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A new car forecourt and a vehicle tax reminder letter from the DVLA

Drivers could face massive car tax hikes when buying new petrol and diesel vehicles

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As part of the new rules, anyone who registers a new zere emission car from April 1, 2025, will pay the lowest first year rate of £10 until 2029-2030.

Rates for cars emitting between one and 50g/km of CO2, including hybrid vehicles, will increase to £110, while those in the 51-75g/km of CO2 will rise to £130.

However, the largest change will affect all other new petrol and diesel vehicles which emit more than 76g/km, which will result in all rates doubling.

This will see drivers potentially face costs of up to £5,490 to register their new petrol and diesel vehicles.

Even drivers who purchase new hybrid vehicles which emit between 76 and 90g/km will have to pay £270 - a stark rise compared to £130 before April.

The most polluting vehicles, namely those which emit more than 255g/km of CO2, will see the first year VED rate jump from £2,745 to £5,490.

Car enthusiasts looking to get their hands on new petrol and diesel cars may instead opt for a low emission vehicle or electric vehicle because of the expensive new charges.

Supercars and other high-end vehicles will also be slapped with the Expensive Car Supplement if they have a list price of more than £40,000.

For the first time, this will also impact electric vehicles, with drivers of expensive cars required to pay £425 for five years in the second year of it being registered.

However, since they are zero emission, they will only have to pay a first year rate of £10. All electric cars are now also required to pay Vehicle Excise Duty, which could cost as much as £195.

Julie Daniels, head of customer at Compare the Market, said: "During this period of price rises in owning and running an EV, drivers who already own an electric vehicle should shop around for car insurance ahead of renewal to look for potential savings.

"Some drivers may see their renewal price drop from last year, but by taking that action to shop around, you'll see how much you could save by switching."

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New cars that will attract a first year VED rate of £5,490 from April 1, 2025