Brits warned about cars affected as drivers could fork out up to £5,400 next year in new tax hike

Brits have been warned about their car tax increasing following the Labour government's recent budget announcement.

Chancellor of the Exchequer, Rachel Reeves, has made a number of changes which will affect businesses and families across the UK.

For motorists specifically, car tax is set to increase along with inflation from 1 April, 2025.

The amount of tax you pay on your car, basically, depends on how green your motor is.

Car tax is going up (Getty Stock Images)

So the more carbon dioxide (CO2) emissions that are run on a vehicle, the higher the tax is going to be.

Reeves said the change was made to help the introduction of more electric cars on the road.

The way it works is that when you first buy a car, a first-year Vehicle Excise Duty (VED) - meaning a full year of tax - will need to be payed upfront.

After that, the rate will lower annually.

At the moment, electric vehicles don’t have any VED charges, but for cars emitting between 111g and 150g/km, they pay £220.

And those vehicles that emit more than 255g/km, pay £2,745 for their first year.

The worse your car is for the environment, the more you will pay (Getty Stock Images)

However, from April, electric car vehicles are now set to pay £10 for their first year’s VED from April, which will then be frozen.

For all other petrol, diesel and hybrid cars though, the rates are increasing massively, by double, in some cases.

Cars with up to 90g/km, you'll pay £270 instead of £135. Then those with petrol and diesel cars - we're talking more than 255g/km - it will increase from £2,745 to £5,490.

Cars included in the highest banding include, but are not limited to:

• The Lamborghini Aventador
• Bentley Continental GT Supersports
• Maserati GranTurismo
• Ferrari GTC Lusso
• Bentley Mulsanne
• Aston Martin Vantage
• Rolls Royce Dawn

Cars with the lowest fees include:

• MINI Countryman Plugin
• Hybrid Nissan Qashqai
• Peugeot 108
• VW Golf
• Lexus CT200H
• Citroen C4
• Vauxhall Astra
• Ford Fiesta
• Ford Focus
• Alfa Romeo Giulietta
• Kia Picanto
• Renault Twingo
• Renault Clio
• Hyundai i30

Chancellor Rachel Reeves told MPs in her Budget statement: “To help drive the transition to electric vehicles the government is strengthening incentives to purchase EVs by widening the differentials in Vehicle Excise Duty First Year Rates between EVs and hybrids or internal combustion engine cars.

“The government is also maintaining EV incentives in the Company Car Tax regime and extending 100 percent First Year Allowances for zero emission cars and EV charge points for a further year.”