Drivers face significant £2,490 car tax increase in April

Starting April 2025, drivers of older petrol and diesel vehicles, registered between 1984 and 2001, will face increased Vehicle Excise Duty (VED) rates, with costs rising from £210 to £220 for smaller engines. New changes will also impose a significant tax of up to £2,490 for electric cars costing over £40,000 during their first five years, affecting fleet operators who may not have budgeted for these increases. Additionally, first-year tax rates for newly-purchased petrol and diesel vehicles will see hikes, with some drivers potentially facing bills as high as £5,500. The government aims to encourage a shift towards electric vehicles by widening the tax differentials between them and higher-polluting models. Insurers are also dealing with rising claims and costs, contributing to a 15% increase in the average cost of motor insurance, which could impact drivers’ financial planning. As these changes loom, many motorists remain unaware of the potential for significant financial impacts from increased taxes and insurance costs.