Huge car tax shake-up will see drivers slapped with average £418 rise next year

A massive shake-up to car tax rules will see motorists pay £418 more on average to drive a new car from next year.

This is according to new research from comparison website Go.Compare, ahead of the car tax rates that are applied to brand new cars going up from April 2025. Car tax is paid every year and is a legal requirement for all vehicles registered in the UK. The only exception currently is if you have an electric vehicle – but this is all changing from April 2025.

If you have a zero emissions car, you will pay the lowest first-year rate – also known as the showroom tax – of £10. Then from the second year onwards, you will pay the standard rate of £195. If you purchase a new vehicle from April 2025 that emits between 1-50 g/km of CO2, including hybrid vehicles, the amount you’ll pay in car tax will rise from £10 to £110.

The rates for new cars emitting 51-75g/km of CO2 will increase from £30 to £130, while all other rates for cars emitting 76g/km of CO2 and above will double from their current level. For a car that emits over 255g/km of CO2, the first-year rate will double from £2,745 to £5,490.

The changes will affect new cars purchased from April next year – so if you have a used car, you won’t be affected by the higher rates. How much you pay in car tax depends on when your car was registered. All petrol and diesel cars manufactured from 2017 onwards pay a flat rate of £190.

But if your car was built between 2001 and 2017, then your car tax is based on how many emissions your vehicle produces. Cars that produce up to 100g/km of CO2 pay no car tax. But even if you don’t need to pay anything, you still need to renew your vehicle every year with the DVLA. A vehicle that produces over 255g/km of CO2 is charged £735. From April, drivers of cars in the lowest emissions category that are currently exempt from paying car tax will be charged £20.

A spokesperson from the Government was quote by the Evening Standard as saying: "This measure will up-rate the Vehicle Excise Duty standard rates for cars, vans, motorcycles and motorcycle trade licences (excluding the first-year rates for cars) by the Retail Price Index, and will reflect the inclusion of zero-emission vehicles in Vehicle Excise Duty from 1 April 2025.

“This is a standard uprating to come into effect from 1 April 2025. Increasing Vehicle Excise Duty rates by Retail Price Index in 2025 to 2026 will ensure that Vehicle Excise Duty receipts are maintained in real terms."

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