New car tax hike kicks in on 1 April – are you prepared?

From 1 April, thousands of drivers across the UK will bear the brunt as vehicle excise duty (VED) changes cause tax bills to soar. In fact, for some, the tax could double – rising from £2,745 to a staggering £5,490 in the worst case.

Drivers of luxury and performance cars that emit over 255g/km of CO2, such as the Audi RS7 and Land Rover Defender 110 5.0 P425 V8, will be hit the hardest. So, think carefully about emissions when choosing your next set of wheels – it could save you thousands in first-year road tax.

The standard road tax rate, which is paid from the second tax payment onwards, will only rise with inflation. But if you buy a car after 1 April with emissions over 75g/km, do expect a significantly higher road tax bill at the point of purchase.

First-year road tax rates will also double for all higher CO2 bands, with the government expecting to raise £400m for the treasury next year – and a massive £1.7bn by the end of the decade.

If you plan to buy an electric car after April, be aware that the changes will impact you too. While you currently don’t pay any car tax for an electric vehicle, from April onwards, anyone buying a new electric, zero, or low-emission car will have to pay the first-year rate of £10. Then, from the second tax year onwards, the charge will rise to the standard rate of £195.

Electric vehicles (EVs) are usually pricier than petrol or diesel cars, so if your EV costs £40,000 or more, you’ll likely face an extra fee between years two and six, known as the expensive car supplement (ECS). The new tax on EVs has raised concerns it may discourage some from switching to electric.

But there’s a silver lining. The government has acknowledged that the current ECS unfairly impacts zero-emission cars. They’re considering raising the ECS threshold for electric cars at a future fiscal event to make EVs more affordable.

There are also some great electric cars for less than £40,000 which will save you paying that additional supplement.

Vehicles built between 2001 and 2017 have their annual tax based on emissions. Under the new changes, diesel cars will see an average tax increase of £1,114, while petrol cars will rise by £503 on average. Hybrid owners will pay an additional £135 to £327, depending on the model.

Chancellor Rachel Reeves announced changes to the VED tax during the Autumn Budget last year, revealing that her aim is to strengthen incentives to purchase zero-emission and electric cars by making petrol and diesel motors more expensive.

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