Car tax changes 'are exactly the right move' despite costing drivers £5,490

Car tax changes are set to be rolled out in "exactly the right move" - despite costing petrol and diesel drivers £5,490. Vehicle Excise Duty (VED) rates for cars, vans and motorcycles are set to rise from next April with the most expensive of these £5,490.

Anna Krajinska, UK Director at Transport & Environment, said the Chancellor's first Budget was a "flying start" for transport and net zero efforts. She added: "Increasing the first year Vehicle Excise Duty differential between polluting and electric cars, for which the UK currently has one of the worst differentials in Europe, is exactly the right move.

"The future is electric and tax policy needs to reflect that. Meanwhile, extending preferential rates for electric cars through the UK’s very successful Benefit-in-Kind policy is a smart decision to sustain EV demand for the years to come."

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Richard Smith, MD of the Road Haulage Association (RHA), said the cost of motoring is still too high for many. He said: "We are disappointed that the Heavy Goods Vehicle (HGV) VED rate and the HGV Levy will rise with RPI from April 1, 2025.

"This will add further cost pressure on vehicle operators at a time when the industry is facing a range of other rising costs." Budget documents state: "The Chancellor has made the decision to protect working people from being dragged into higher tax brackets by confirming that Income Tax and National Insurance Contributions thresholds will be unfrozen from 2028-29 onwards."

"The Chancellor is also protecting motorists by freezing fuel duty for one year and extending the temporary 5p cut to 22 March 2026 – a tax cut worth £3 billion. This will save the average car driver £59, vans £126 and Heavy Goods Vehicles £1,079 next year," the documents add.

Chancellor Rachel Reeves delivered the Autumn Statement on Wednesday.