Millions of drivers with gas-guzzling cars are bracing for a tax increase that could cost them an additional £140 just to use their vehicles.
In the recent Spring Budget announcement, the Chancellor revealed that the Vehicle Excise Duty (VED), commonly referred to as the road tax or car tax, will be increased by the DVLA in line with inflation. This means that many car owners can expect a rise in their annual taxes.
For new cars with high emissions, the VED for the first year is set to increase by £140, reaching £2,745. However, this hike will only affect the most polluting newly manufactured vehicles. Cars built after 2017 will see a £10 rise in their flat annual rate starting immediately.
The Vehicle Excise Duty depends on factors such as the age, fuel type, and carbon emissions per kilometer of a vehicle. Older, less polluting cars are exempt from VED, while newer gas-guzzlers face hefty taxes just to drive. Electric vehicles have been exempt from this charge, but it has been announced that starting in April 2025, they too will be required to pay.
Vehicles manufactured between 2007 and 2017 are exceptions to the annual VED rise in line with inflation. These vehicles only pay tax based on their emissions, regardless of the type of fuel they use. Many diesel vehicles within this age range must pay to enter Ultra Low Emission Zones (ULEZ) due to their low CO2 emissions, while their VED remains minimal or nil.
In addition to the existing road tax increases, a costly Car Supplement of £410, which is added to the sale of all cars over £40,000, will also go up by £20. This means that those purchasing very expensive vehicles should budget for even more expenses.
VED tax bands for first-year cars from April 1
| CO2 emissions g/km | VED rate |
| 1 to 50 | £10 |
| 51 to 75 | £30 |
| 76 to 90 | £135 |
VED rates for cars registered between March 1, 2001 and March 31, 2007
| VED band | CO2 emissions g/km | Annual rate |
| A | Up to 100 | £0 |
| B | 101 to 110 | £20 |