The AA has issued a warning to motorists regarding new vehicle tax adjustments this month, highlighting that many owners of smaller and family vehicles might be facing an unexpected financial hit. They point out that while those who currently benefit from lower road tax rates may be paying around £150 on average, and upgrading their car could lead to increased charges.
Vehicle excise duty (VED) is calculated based on your car's CO2 emissions and its registration date. Vehicles registered between March 1, 2001, and March 31, 2017, boasting low emissions of up to 100g/km could enjoy car tax as low as £20 a year.
On the flip side, if you're considering a newer model registered after April 1, 2017, get ready to pay a flat rate of £195 each year, regardless of its emissions. Although brand-new cars may face different rates in their first year - potentially offering lower taxes for those upgrading - high emitters registered between March 1 and March 31, 2017, could face annual taxes of up to £760 , reports .
Moreover, the AA has estimated that the typical motorist might spend an average total of £650 annually on fuel duty and road tax. Jack Cousens, head of roads policy at The AA, expressed concern about the implications, saying: "VED changes and future increases threaten a major financial shock to the finances of millions of car owners whose vehicles are still paying VED under the 2001-2017 CO2-banded system.
"For those with ageing low-CO2 small family and city cars, the transition to the current standard VED rate could see a hike of £150 or more a year on their motoring tax. With the average car currently paying £436.84 in fuel duty a year - or £524.21 when VAT is added at the pump - a £150 increase in the VED they will pay represents a 34% hike (29% with VAT) on top of what they are paying in fuel duty."
For the first time, electric vehicles are now also subject to car tax. If your EV was registered on or after April 1, 2017, you will pay the standard rate of car tax, which will be £195 a year from April 2025.
If your EV was registered between March 1, 2001 and March 31, 2017, your annual car tax bill will be £20.
The first-year car tax rate - known as the showroom tax - has also just increased for all types of cars. This is the tax you pay for the first year of owning a brand new vehicle - after this, you move to the standard rate of car tax.
If you buy a brand new EV, the first-year car tax rate will be £10.
If you purchase a car that emits between 1-50g/km of CO2, the first-year car tax rate has just risen from £10 to £110. The rate for new cars emitting 51-75g/km of CO2 has increased from £30 to £130, while all other rates for cars emitting 76g/km of CO2 and above have doubled from their current level.
This means that for a car emitting more than 255g/km of CO2, the first-year car tax rate has jumped from £2,745 to £5,490. A detailed list of these changes and how much additional you'll pay when purchasing a brand new car can be found below.
From the second year onwards, the standard car tax rate of £195 applies to all vehicles registered after April 2017.
First-year car tax rates from April 2025- 0g/km - £0 now, rising to £10
- 1-50g/km - £10 now, rising to £110
- 51-75g/km - £30 now, rising to £130
- 76-90g/km - £135 now, rising to £270
- 91-100g/km - £175 now, rising to £350
- 101-110g/km - £195 now, rising to £390
- 111-130g/km - £220 now, rising to £440
- 131-150g/km - £270 now, rising to £540
- 151-170g/km - £680 now, rising to £1,360
- 171-190g/km - £1,095 now, rising to £2,190
- 191-225g/km - £1,650 now, rising to £3,300
- 226-255g/km - £2,340 now, rising to £4,680
- 255+g/km - £2,475 now, rising to £5,490
- Up to 100g/km - £0 now, rising to £20
- 101-110g/km - £20 (no change)
- 111-120g/km - £35 (no change)
- 121-130g/km - £160, rising to £165
- 131-140g/km - £190, rising to £195
- 141-150g/km - £210, rising to £215
- 151-165g/km - £255, rising to £265
- 166-175g/km - £305, rising to £315
- 176-185g/km - £335, rising to £345
- 186-200g/km - £385, rising to £395
- 201-225g/km - £415, rising to £430
- 226-255g/km - £710, rising to £735
- 255+g/km - £735, rising to £760
