Petrol and diesel car owners could face significant road tax increases from April 2025, following new Vehicle Excise Duty (VED) rules announced by HMRC. These changes will see rates rise across the board, with older vehicles and diesel models hit the hardest.
VED, often called road tax, is an annual charge for keeping or driving a vehicle on public roads. From April, most drivers will see higher bills as rates increase in line with inflation and CO2 emissions.
First-year VED rates for new cars are set to double, with diesel vehicles facing the steepest increases. GoCompare estimates that diesel drivers will pay an average of £1,113 more annually, nearly twice the rise for petrol cars.
Cars registered between 1984 and 2001 will also feel the impact. Rates will rise by £10 to £220 annually for vehicles in the lower power bracket. Owners of higher-powered cars (above 1549cc) will see an increase of £15, taking their annual cost to £360.
Even drivers of zero-emission vehicles won’t escape the changes. Electric cars will no longer be exempt from tax in their first year, while hybrid vehicles will cost an extra £135 to £327 on average, depending on the model.
The Driver and Vehicle Licensing Agency (DVLA) confirmed that these changes are part of the Government’s plan to align VED with emissions and inflation, incentivising cleaner vehicles.
Talk to us about your finances.
