Drivers purchasing new high-emission vehicles are set to face a substantial financial hit from April, with 59 specific car models from 24 major manufacturers subject to a first-year Vehicle Excise Duty charge of £5,690.
Substantial Increase in First-Year VED Charges
The significant tax increase stems from substantial modifications to Vehicle Excise Duty rates implemented last year, which saw some models experience a dramatic rise of £2,745. The government has chosen to dramatically increase first-year VED charges for petrol and diesel vehicles from April 2025, with these substantial fees paid by purchasers of brand-new cars before they transition to the standard rate.
Charges have increased on a sliding scale, with the majority of higher bands experiencing fees that double from their 2024 levels. Vehicles emitting over 255 g/km of CO2 faced the steepest £2,745 rise, impacting some of the most widely-driven cars on Britain's roads. They rose to £5,490 for the first year - and this is expected to rise again to £5,690 from April 1st 2026.
Mainstream and Premium Manufacturers Affected
Mainstream manufacturers such as Ford and Toyota will see certain models affected, while BMW, Mercedes and Audi vehicles will also be impacted. Premium marques will shoulder the greatest burden of the changes, with models from Porsche, Lotus, Lamborghini and McLaren among those set to face the new levy.
Chancellor Rachel Reeves announced the measure to incentivise consumers towards purchasing electric vehicles and broaden the divide between 'higher polluting' cars and EVs. The first-year tax figure is determined by the quantity of carbon dioxide the vehicle emits.
Current Tax Landscape and Future Changes
At present, electric vehicles benefit from being exempt from Vehicle Excise Duty, while cars emitting between 111g and 150g/km of CO2 faced a £220 charge. Those exceeding 255g/km are subject to an even steeper first-year fee of £5,490 - which is set to rise again. Changes last April saw EV owners paying a nominal £10 for their first year's VED—a rate that has recently been frozen.
In contrast, drivers of petrol, diesel, and hybrid cars are bracing themselves for a significant increase as these rates are set to double. A Treasury spokesperson exclusively told Car Dealer Magazine that by April 2025, purchasing new vehicles like a Ford Puma could result in a doubled first-year VED cost, increasing from £220 to £440.
Detailed Tax Rate Changes
The Budget document provided more detail on vehicle taxation, explaining that Vehicle Excise Duty first-year rates are paid for the first year of a car's lifecycle at the point of registration, and vary based on emissions. From 1 April 2025, these rates will be changed to widen the difference between zero-emission, hybrid and internal combustion engine cars.
Expected first year car tax rates from April 1st 2026 include:
- 0g/km - Remains at £10
- 1-50g/km - Rising from £110 to £115
- 51-75g/km - Rising from £130 to £135
- 76-90g/km - Rising from £270 to £280
- 91-100g/km - Rising from £350 to £365
- 101-110g/km - Rising from £390 to £405
- 111-130g/km - Rising from £440 to £455
- 131-150g/km - Rising from £540 to £560
- 151-170g/km - Rising from £1,360 to £1,410
- 171-190g/km - Rising from £2,190 to £2,270
- 191-225g/km - Rising from £3,300 to £3,420
- 226-255g/km - Rising from £4,680 to £4,850
- Over 255g/km - Rising from £5,490 to £5,690
After the first year, vehicles will pay a standard rate expected to be £200 (currently £195).
Full List of Affected High-Emission Models
A comprehensive list of new models emitting over 255 g/km has been released, including vehicles from numerous premium manufacturers:
- Audi RS6 4.0 TFSI V8
- Audi S8 4.0 TFSI V8
- McLaren GT 4.0T V8
- Audi R8 5.2 FSI V10
- Lamborghini Huracan 5.2 V10
- Chevrolet Corvette Stingray 6.2 V8
- Volkswagen Amarok 3.0 TDI
- Aston Martin DBX 4.0 V8
- Ferrari Roma 3.8T V8
- Audi SQ7 4.0 TFSI V8
- Range Rover Sport 4.4P V8
- Jaguar F-Pace 5.0 P575 V8
- Aston Martin DB12 4.0 V8
- Porsche 911 3.7T 992 Turbo
- Jeep Wrangler 2.0 GME
- Ford Ranger 2.0 TD EcoBlue
- Audi RSQ8 4.0 TFSI V8
- Lotus Emira 3.5 V6
- Bentley Continental 4.0 V8
- Audi SQ8 4.0 TFSI V8
- Aston Martin Vantage 4.0 V8
- Toyota Hilux 2.8D
- Porsche Macan 2.9T V6
- Mercedes-Benz SL55
- Range Rover 4.4 P530 V8
- Mercedes-Benz AMG GT 4.0 V8
- Porsche 718 Cayman 4.0 GT4
- Lamborghini Urus 4.0 V8 BiTurbo
- Audi RS7 4.0 TFSI V8
- Ford Mustang 5.0 V8
- Toyota Land Cruiser 2.8D
- Bentley Continental 6.0 W12
- Mercedes-Benz GLC63
- Ford Ranger 3.0 V6
- INEOS Grenadier 3.0P
- Range Rover 4.4 P615 V8
- Land Rover Defender 90 5.0 P425 V8
- Rolls-Royce Ghost 6.75 V12
- Ford Ranger 3.0 EcoBlue
- Mercedes-Benz G63
- Ferrari Purosangue 6.5 V12
- Rolls-Royce Cullinan 6.75 V12
- Alfa Romeo Stelvio 2.9 V6 Bi-Turbo
- Mercedes-Benz GLE63
- Maserati Levante 3.0 V6
- Porsche Cayenne 4.0T V8
- BMW M8 4.4 V8
- Maserati MC20 3.0 V6
- Land Rover Defender 110 5.0 P425 V8
- Mercedes-Benz G400D
- Lamborghini Revuelto 6.5 V12
- Bentley Bentayga 4.0 V8
- BMW X7 M 4.4 V8
- BMW X6 M 4.4 V8
- BMW Alpina XB7 4.4 V8
- Bentley Flying Spur 4.0 V8
- Maserati Levante 3.8 V8
- BMW X5 M 4.4 V8
- Mercedes-Benz GLS63h
Luxury Car Tax Surcharge Details
Vehicles that cost more than £40,000 when new (including options) incur an extra annual charge of £425 (increasing from £410) on top of the standard annual VED car tax rates, from their first through sixth birthdays. Cars that cost more than £40,000 new (including options) incur an extra charge of £425 for five years, starting when the car is taxed for the second time.
This means you're out of pocket to the tune of £2,125 in extra tax by the time the car turns six. From 1 April 2026, the threshold for the "luxury car tax" (£425 surcharge) for EVs will increase to £50,000, while remaining at £40,000 for petrol/diesel cars.
Additional Tax Considerations
If you're driving a modern classic or just a reliable older runaround registered before March 2001, your tax is based on VED engine size categories rather than CO2 emissions. The classic car 40-year tax rule is still firmly in place - if your car was built more than 40 years ago, you're still in the 'historic vehicle' bracket and pay £0 in VED.
Similarly, road tax exemptions for disabled drivers haven't changed—if you're eligible, you'll continue to be fully exempt from these hikes.
Future Mileage Tax for Electric Vehicles
From April 2028, electric vehicles will be charged a new 'mileage tax' to fill in the gap left by no fuel duty being paid for the vehicles. Drivers will be charged an equivalent of 3p per mile for battery electric cars and £0.015p per mile for plug-in hybrid cars.
The Chancellor says that this will go towards helping road maintenance. That price will increase annually with the Consumer Price Index. At present, there is no announced framework for how this policy will be implemented or how drivers will pay for it. It would add an estimated £300 per 10,000 miles driven in an EV.
Industry Response to Changes
John Cassidy, sales managing director at Close Brothers Motor Finance, commented on the proposed changes: "A pay-by-mile scheme for electric vehicles risks increasing costs for many drivers, particularly those who rely on their cars for higher annual mileage. With energy bills rising and public charging becoming more expensive, motorists will fear that EV ownership could end up being significantly more expensive than traditional ownership."
The government is also maintaining EV incentives in the Company Car Tax regime and extending 100% First Year Allowances for zero emission cars and EV charge points for a further year, as announced in the Budget statement.
