Car tax changes for 2025 as some drivers to be left with bill of almost £5,500

The Treasury said it would raise the standard Vehicle Excise Duty (VED) rates for cars, vans and motorcycles in line with inflation from April 1, 2025

Under new plans revealed in this week's Budget, some drivers could see their car tax increase by nearly £5,500 a year. Rachel Reeves presented her first Labour Budget this week, and along with her parliamentary speech, the Treasury released a series of documents detailing further updates and changes.

Tax must be paid when the vehicle is first registered, covering the car for the next 12 months. After this, vehicle tax is paid every six or 12 months at a different rate. Similar increases will be seen for cars emitting 51-75g/km of CO2, with the cost rising from £30 to £130, reports the Mirror. Moreover, from April 1, 2025, those purchasing the highest polluting petrol and diesel vehicles—those emitting over 255g/km—will see the price soar to £5,490 from the present £2745 when rates double the following year. In a move to encourage the adoption of zero-emission cars, the Budget also announced that first-year VED rates for new zero-emission vehicles would remain at a low £10 until the 2029-30 tax year, albeit this is a £10 rise from the existing rate.

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