Car tax band changes after Rachel Reeves' budget mean some drivers will pay up to £5,490 in 2025

Major changes to vehicle tax announced in the Budget could result in petrol and diesel vehicle owners facing a tax bill of £5,490 next year. The Government has declared that from April 1, 2025, standard Vehicle Excise Duty (VED) rates for cars, vans, and motorcycles will increase in line with inflation.

Drivers purchasing new vehicles emitting over 255g/km of CO2 after this date are expected to be particularly hard hit with VED rates as they double next year. For money-saving tips, sign up to our Money newsletter here

Commenting on the budget announcement, IAM RoadSmart's director of policy and standards, Nicholas Lyes, said: "Increasing vehicle excise duty on all but zero emission vehicles in the first year will hit those buying new conventional vehicles in the pocket.

"A better solution to incentivise the take-up of electric vehicles would have been to cut VAT on the sale of new electric vehicles with a list price of £40,000 and under." These statements follow the Labour Party Chancellor's declaration that Vehicle Excise Duty first-year rates for cars registered after April 1, 2025, will be adjusted to incentivise the purchase of zero-emission and electric cars, by increasing the tax difference between zero-emission, hybrid, and internal combustion engine vehicles.

The new rates

• 0g/km - £0 will rise to £10

• 1 to 50g/km - £10 will rise to £110

• 51 to 75g/km - £30 will rise to £130

• 76 to 90g/km - £135 will rise to £270

• 91 to 100g/km - £175 will rise to £350

• 101 to 110g/km - £195 will rise to £390

• 111 to 130g/km - £220 will rise to £440

• 131 to 150g/km - £270 will rise to £540

• 151 to 170g/km - £680 will rise to £1,360

• 171 to 190g/km - £1,095 will rise to £2,190

• 191 to 225g/km - £1,650 will rise to £3,300

• 226 to 255g/km - £2,340 will rise to £4,680

• Over 255g/km - £2,745 will rise to £5,490

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