New car tax bands for petrol and diesel mean drivers face £3,300 VED charge

New car tax bands are set to increase fees for all petrol and diesel owners. First-year VED rates will be completely overhauled with thousands set to be added to motorists' bills as part of the shake up coming after Christmas.

The government explained the new Vehicle Excise Duty (VED) bands and said: "This measure will uprate the Vehicle Excise Duty rates for cars and all other rates for vans, motorcycles and motorcycle trade licences 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." Owners of cars, vans, motorcycles and holders of motorcycle trade licences who will be liable for Vehicle Excise Duty from 1 April 2025, the Labour Party has confirmed.

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"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," it states. "This measure was announced at Autumn Budget 2024. Vehicle Excise Duty is a tax on vehicle ownership, and rates depend on the vehicle type and first registration date. Vehicle Excise Duty rates have increased in line with inflation since 2010.

"From 1 April 2025, zero-emission vehicles will be subject to Vehicle Excise Duty. Further information about how Vehicle Excise Duty will apply to zero emission vehicles can be found in the tax information and impact note titled ‘Introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025’.

"From the second year of registration onwards, zero-emission cars will move to the standard annual rate." Vehicles emitting between 226-255g/km of CO2 will rise from £2,340 to £4,680. Models producing anywhere between 191-225g/km CO2 will now pay £3,300 in the first year, double the current £1,650 fee.

Vehicles producing over 255g/km of CO2 will rise from £2,745 to £5,490.