Drivers to be hit with average £418 car tax hike from April

Drivers are set to pay an average of £418 more in car tax bills from early next year. Go Compare experts warn that drivers will be forking out "significantly more" in Vehicle Excise Duty (VED) come spring.

Petrol and diesel vehicle owners are facing a sharp rise in first-year VED rates starting next April. Electric vehicle owners are also not spared, as their years of tax exemptions are drawing to a close.

Based on buying trends in the first half of this year, Go Compare's motoring experts predict an additional £162.9 million will be collected in VED during the same period in 2025. When calculated among cars on UK roads, it means drivers will pay around £418more to drive a new vehicle, reports the Express.

Tom Banks from Go Compare said that motorists will likely feel the pinch of higher rates within months. He advised: "The increased VED rates mean most new car buyers will be paying a lot more than they were expecting in 2025, but there are ways you can minimise the impact this will have on your finances.

"For instance, consider purchasing a low-emissions car that will place your vehicle in the cheaper tax bands."

Although fees will rise for nearly all vehicles from April, the amount will still depend on emission levels. New electric car owners will pay just £10 in their first year before moving to the standard rate, while new diesel vehicles, which typically have higher emissions, will see the greatest increases.

Research by Go Compare has revealed that if diesel car sales remain steady, an additional £26.1million in tax will be collected next year, translating to an average increase of £1,113 per vehicle. Meanwhile, petrol car owners, who makeup the largest share of the UK market, are expected to face an extra £89.4 million in tax, with an average hike of £503 per car.

To mitigate this, Tom suggested: "If you can't purchase a suitable hybrid or EV, consider opting for a nearly new vehicle instead. This gives you that new car feeling for a fraction of the price, and will allow you to dodge the increased tax."