Hard-up motorists are getting clobbered again as vehicle tax is set to rise this month after fuel prices soared due to Donald Trump’s war in the Middle East
Britain’s squeezed motorists face a hammering from Chancellor Rachel Reeves with another tax hike despite the Iran war already sending fuel prices soaring. Vehicle tax has gone up by £5 for most cars registered after April 1, 2017.
It applies to petrol, diesel, hybrid and electric vehicles within this date range, but the exact amount depends on a number of factors, including the type of vehicle owned, when it was first registered or its CO2 emissions.
An average new petrol car (around 143g/km) carries a first-year charge of £560, rising to £1,360 for an average new diesel, the Express reports. And a car emitting more than 255g/km of CO will now be stung by a first-year rate of £5,690 – up £200.
A tax on vehicles was first introduced in Great Britain in 1889 via the Customs and Inland Revenue Act 1888. From 1909, the tax became linked to the construction and upkeep of the road network through the Development and Road Improvement Funds Act 1909.
This is no longer the case and tax revenue is not hypothecated for road maintenance. More recently, it became more closely linked to vehicles’ environmental performance.
Vehicle tax has been criticised for not effectively targeting the external costs of motoring, such as road damage and pollution, since it is paid at the same rate regardless of how much the vehicle is getting used.
Drivers need to pay tax when the vehicle is first registered and this covers the vehicle for 12 months. Tax is then payable every six or 12 months at a different rate. The rate of tax is based on a vehicle’s CO2 emissions.
For vehicles with a list price of more than £40,000 (petrol/diesel) or £50,000 (electric), drivers have to pay an extra £440 a year if they have any of the following: a car or motorhome with a list price of more than £40,000 or an electric car or motorhome with a list price of more than £50,000. This also applies to electric vehicles registered between 1 April 2025 and 31 March 2026.
Drivers who do not have to pay this rate if both the following apply; it is a zero emission vehicle and the vehicle was registered before 1 April 2025.