Starting in April 2025, owners of petrol and diesel cars in the UK will experience a dramatic surge in Vehicle Excise Duty (VED) rates, as 59 models across 24 brands face tax hikes of up to £2,745. Iconic brands such as Ford, BMW, and Mercedes will be affected by the changes announced in the Autumn Budget by Chancellor Rachel Reeves.
The updated VED structure, part of the Labour government’s policy to incentivize electric vehicle (EV) adoption, primarily targets high-emission vehicles. First-year rates for petrol, diesel, and hybrid cars will see a substantial rise, doubling for many popular models.
The tax hike applies to new cars registered after April 1, 2025. Owners of vehicles emitting over 255 g/km of CO2 will pay the highest rates, including models from Porsche, Lamborghini, and Range Rover. These fees are calculated based on carbon dioxide emissions, making high-performance cars and luxury SUVs prime targets.
For instance, buyers of a Range Rover Sport 4.4P V8 could pay up to £5,490 in first-year VED, while those purchasing a Ford Puma will see their rate rise from £220 to £440. By contrast, electric vehicles remain largely exempt, with a minimal £10 first-year fee introduced for EVs.
According to Reeves, the initiative aims to accelerate the transition to low-emission transportation. Speaking to Parliament, she stated, “The government is widening the gap in VED rates between internal combustion engine (ICE) vehicles and EVs to drive adoption while maintaining incentives such as Company Car Tax benefits and First-Year Allowances for EV charging infrastructure.”
Currently, ICE vehicles dominate UK roads, but Labour’s ambitious plan seeks to align tax policies with environmental goals by discouraging fossil fuel consumption.
A comprehensive list reveals models set to face the £2,745 surcharge. Alongside luxury brands like Ferrari and Rolls-Royce, familiar models such as the Toyota Land Cruiser, Ford Mustang, and BMW X5 M are also affected. High-performance vehicles, including the Lamborghini Urus and Audi R8, feature prominently in the revised tax brackets.
The policy shift underscores the Labour government’s commitment to environmental sustainability but poses challenges for automakers and consumers still reliant on traditional fuel vehicles.
As the deadline approaches, the automotive industry faces mounting pressure to adapt. Consumers may pivot towards zero-emission vehicles, spurred by financial and environmental considerations. Meanwhile, the debate continues over the broader implications of these tax reforms on middle-income drivers and car affordability in the UK.
While electric vehicles remain the clear winners under this plan, the economic impact of transitioning millions of drivers remains uncertain. The government’s decision is a bold step towards cleaner transportation, but its effectiveness will depend on public and industry responses.
