Huge hike in first year tax rate for some new cars

Tucked away on the government's Autumn Budget is a significant change to the pricing for the First Year Rates for Vehicle Excise Duty (VED). 

First the good news - If you're thinking of buying an electric car in 2025, then from April 1st you will only have to pay £10 for the first year. This is a modest increase from today's £0 rate and this has also been fixed until 2029-30. 

Beyond that and that's where the prices have increased noticeably. If you're thinking of buying a car that emits only 1-50g/km of CO2, prices for the first year increase from £10 to £110. It's a similar story for cars emitting 51-75g/km of CO2, again being subjected to a first year rate of tax increase from £30 to £130.

First Year Rates of VED double

If you're buying a new car that emits 76g/km of CO2 or more you can expect to see the first year rate of tax double come April 1st 2025 to £270. A car emitting 151-170g/km of CO2, currently taxed at £680, will rise to £1360.

What does this mean for some of the most popular cars on sale today? Opt of a Ford Puma with the popular 1.0-litre EcoBoost mHEV engine will see an increase from £220 to £440 come the new tax year. Families looking at a Nissan Qashqai with a 1.3-litre DIG-T engine will pay £540 instead of £270. Fancy a hot hatch? A Volkswagen Golf GTI will now cost you a further £680 in first year tax, increasing to £1360 from £680.

Most impacted cars

With the First Year Rate of VED doubling like this, as you can expect, cars that admit the most CO2, are impacted the most. Buyers of cars that emit 255g/km of CO2 or more will see a first year tax rate increase from £2745 to a hefty £5490.

This means that for example a Range Rover V8 will cost £5490 to tax for the first year, while a BMW X4 M will now set you back £4680. 

Take a look out our guide to the latest car tax rates for more info.