Starting April 1, 2025, major changes are coming to car taxes in the UK. The government has announced a hike in the Vehicle Excise Duty (VED), which means petrol and diesel drivers could face a significant rise in costs. This is all part of a new budget plan to tackle pollution by making it pricier to drive cars that emit more harmful gases. The highest-polluting vehicles could see annual tax bills reach a whopping £5,490!

What’s Changing?

The main goal of this tax increase is to encourage drivers to switch to eco-friendly cars, like electric vehicles (EVs). To make this happen, the government will raise VED rates for vehicles, from cars to motorcycles, depending on their emissions. This rate increase is tied to inflation, meaning it could go up or down based on the economy. But for now, it looks like a hefty hike.

For anyone driving a petrol or diesel car, especially ones with high emissions, this change could hit hard in the wallet. Vehicles emitting over 255g of CO2 per kilometer—the worst offenders—are expected to pay up to £5,490 annually. This tax applies to both new and used cars, depending on their registration date and emissions.

Why is the Government Doing This?

The primary reason is to reduce pollution and encourage a greener future. Cars with higher emissions release more carbon dioxide (CO2), which is a major contributor to climate change. Raising taxes on these cars is intended to discourage their use and make electric or hybrid vehicles more appealing by comparison. The hope is that these tax changes will help reduce overall emissions by nudging people towards lower-emission options.

New Car Tax Rates for Different Emission Levels

Here’s a simple breakdown of the new VED rates for various car emission levels, starting in 2025:

Emissions Level (g/km)	Old Rate	New Rate
0	£0	£10
1 to 50	£10	£110
51 to 75	£30	£130
76 to 90	£135	£270
91 to 100	£175	£350
101 to 110	£195	£390
111 to 130	£220	£440
131 to 150	£270	£540
151 to 170	£680	£1,360
171 to 190	£1,095	£2,190
191 to 255	£1,420	£2,840
Over 255	£2,745	£5,490

These rates show just how much of a difference there is between emissions levels. For example, a car that emits between 1-50g/km will go from paying just £10 to £110—a tenfold increase!

Who Will Feel the Pinch?

The people most affected by this change will be those buying new, high-emission cars, such as large SUVs or sports cars. Since these vehicles release more CO2, their tax rates are set to be very high. If you already own a petrol or diesel car with high emissions, you’ll likely see a significant increase in your yearly tax bill as well.

Nicholas Lyes, policy director at IAM RoadSmart, believes this tax increase could be tough on people who can’t afford to buy electric or hybrid cars right away. He says, “Increasing vehicle excise duty on all but zero-emission vehicles in the first year will hit those buying new conventional vehicles in the pocket.” This could be especially challenging for people who rely on bigger vehicles for family needs or work.

Are There Any Benefits?

To make the switch to electric vehicles more attractive, the government will keep VED rates for zero-emission vehicles as low as possible. These cars will continue to have a lower tax rate compared to petrol or diesel vehicles. The goal is to reward drivers who choose environmentally friendly cars and motivate others to consider EVs or hybrids.

More Incentives to Go Electric

Switching to an electric vehicle might seem expensive upfront, but there are many advantages in the long run. For one, EVs don’t use petrol or diesel, which means lower fuel costs. They also need less maintenance than traditional cars because they have fewer moving parts. Plus, some EVs get free or reduced parking, and there are often government grants available to help with the purchase price.

What About Used Cars?

While the new tax rates mostly target new car buyers, used car owners could feel the impact too. If you buy a used petrol or diesel car after April 1, 2025, that falls into a higher emission category, you’ll also be paying the updated VED rates. This change could influence the resale value of high-emission vehicles, as buyers might avoid them to dodge high tax costs. However, if you already own your car and don’t plan to sell, you’ll simply pay the adjusted VED each year.

Looking Forward

These new tax rates show that the government is committed to cutting down pollution and promoting cleaner transportation. Many experts think these moves will increase demand for electric and low-emission cars, pushing manufacturers to make them more affordable. The switch to electric vehicles may take time, but the government is making it clear that they want a greener future.

Is This the Best Solution?

Some people, however, think there might be better ways to encourage greener choices. For example, instead of raising car taxes, the government could lower the price of electric vehicles by cutting VAT (Value Added Tax). This could make EVs more affordable for everyone, not just for those who can handle high taxes.

For now, though, the message is clear: if you’re thinking about buying a new car, going electric might save you a lot of money on taxes. These changes might feel like a big adjustment, but they’re meant to help the environment and create a more sustainable way of getting around.