Drivers could face paying up to £5,400 next year after car tax hikes

Motorists will be impacted by the recent Budget

Chancellor of the Exchequer, Rachel Reeves, unveiled the first Labour Budget in 15 years as she stood in front of the despatch box on Wednesday.

She announced a host of changes that will affect individuals and businesses across the UK.

Those who vape were heavily impacted as new vaping tax was announced and farmers also felt hard done by.

Vehicle Excise Duty, or VED, commonly known as car tax will increase in line with inflation from 1 April 2025.

How much car tax you pay depends on how green your motor is. The worse the carbon dioxide (CO2) emissions, the more you will have to fork out.

When a car is first registered, you have to pay a full year's car tax up front, with the rate then lowering for the year's after this.

Vehicles that emit between one and 50 grams of CO2 per kilometre (this includes hybrid vehicles) will increase from £10 to £110 for the 2025/26 year for their first year on the roads.

Cars that emit 51 to 75 grams of CO2 per kilometre will see the amount increasing from £30 to £130.

However, the biggest price hike will be felt by those emitting 76 grams, or more, of CO2 per kilometre.

Cars, vans, and motorbikes that fall into this category will see their rates double from their current level for 2025/26.

For those with cars up to 90 grams of CO2 per kilometre, they will have to pay £270 instead of £135. While those with the most guzzling of petrol and diesel cars - more than 255 grams of CO2 per kilometre - it will increase from £2,745 to £5,490.

The likes of Lamborghini Aventador drivers and Maserati GranTurismo owners will be impacted more while those who drive a MINI Countryman Plugin or a Hybrid Nissan Qashqai will be among those who pay lower fees.

The government says: “The government will change the VED First Year Rates for new cars registered on or after 1 April 2025 to strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars.”