Car tax hikes coming in April that 75% of Britons are unaware of: Some drivers

Millions of drivers are unaware of major car tax increases coming into force in a matter of months that will see some motorists stung an additional £2,745, new research has suggested.

Up to three quarters of motorists are unaware of new tax rules arriving from 1 April 2025, according to a poll by WeBuyAnyCar.

These include first-time costs for electric vehicle drivers and enormous financial implications for new car buyers.

Some changes to Vehicle Excise Duty (VED) were announced last year during Chancellor Rachel Reeves’ Autumn Budget statement in what was dubbed a stealth tax on petrol and diesel cars.

However, other new rules affecting EVs were confirmed back in 2022 by the previous Tory Government and will be retained by the current regime.

These increases in car tax will raise £400million per annum for the Treasury, Reeves told MPs during her statement last October.

For the 75 per cent of motorists who do not know about the changes to VED from April, This is Money has detailed the three main updates to car tax that will hammer the wallets of the nation’s drivers.

1. ‘Showroom tax’ rates DOUBLED for new petrol, diesel and hybrid cars

Car tax changes introduced in April will see the cost of first-year VED for all new petrol and diesel models double, stinging the most polluting cars with an annual charge as high as £5,490.

The tax raid on new combustion engine motors was confirmed in Rachel Reeves’ Budget in October.

The Chancellor said VED first-year rates for cars registered after 1 April 2025 will be adjusted to ‘strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine cars’.

However, the supporting Budget document revealed that Ms Reeves’ plot to extend the tax gap to greener vehicles would be achieved by doubling first-year VED rates – also known as ‘showroom tax’ – for petrol, diesel and many hybrid cars while costs for new EVs will rise from zero to just £10.

Experts have labelled it a ‘shove, not a nudge’ towards EV uptake.

The £10 showroom tax on zero-emission electric cars will be retained until 2029-30 to incentivise drivers to switch to greener cars, with the Labour government standing by its manifesto promise to ban the sale of new petrol and diesels in 2030.

To also encourage motorists to buy hybrid models in the interim, new examples with emissions between 1 and 50g/km CO2 (which is achieved only by plug-in hybrid models) will from April 2025 be subject to £110 first-year VED rates.

For plug-in hybrids emitting between 51 and 75g/km CO2, the showroom tax in 2025-26 will be £130.

But in a blatant move to discourage drivers from buying new petrol and diesel cars, the current first-year VED rates applied to these vehicles will be doubled.

As such, this will see buyers incur huge costs, particularly those purchasing large family models and especially anyone acquiring heavy, gas-guzzling SUVs and supercars.

‘All other rates for cars emitting 76g/km of CO2 and above will double from their current level for 2025-26,’ the document states.

The lowest first-year VED rate for petrols and diesel with emissions of 76-90g/km currently rings in at £135 today. 

However, from 1 April, this will double to £270.

Even most small conventional ‘self-charging’ hybrid vehicles have CO2 emissions above this threshold.

Toyota’s Yaris hybrid, even in its least-polluting specification, puts out 91g/km CO2 and therefore will be stung with the double tax rise, increasing from £165 if you buy a new one today to £330 if you were to order one after 1…