Drivers could face a £2000 tax rise in April 2025

According to Labour’s recent Budget announcement, drivers who buy new luxury vehicles will see a £2000+ increase in their vehicle excise duty (VED) in April 2025. 

59 cars to be covered by the road tax increase 

Luxury vehicles that emit over 255g/km of CO2 are subject to this new rise in tax. Owners could be expected to pay as much as £2,745 more, bringing up their annual bill to £5,490.  

The 59 models are manufactured by these brands:  

This new tax increase begins in April 2025. Standard VED will rise in line with inflation, but new cars bought after that date emitting more than 75g/km of CO2 will be subject to a much steeper tax.

This rise is predicted to net more than £400 million next year, and close to £1.7 billion by the end of the decade.  

What about zero-emissions vehicles? 

There may also be a break for people who buy zero emissions vehicles.  

The Budget document states: “The government recognises the disproportionate impact of the current VED Expensive Car Supplement threshold for those purchasing zero-emission cars and will consider raising the threshold for zero-emission cars only at a future fiscal event, to make it easier to buy electric cars.”  

Why the change in VED? 

Chancellor Rachel Reeves indicated that this change is to encourage drivers to switch to more environmentally friendly vehicles.  

She said: “I will maintain the incentives for electric vehicles in company car tax from 2028 and increase the differential between fully electric and other vehicles in the first year rates of Vehicle Excise Duty from April 2025.” 

To find out more about road tax, read our blog on VED.