Some new cars will cost a staggering £5,490 just to tax from next year when Rachel Reeves’ Vehicle Excise Duty (VED) raid on petrol and diesel vehicle drivers takes effect in the spring.
During her Budget statement last month, the Chancellor said VED (also known as road tax) first-year rates for cars registered after 1 April 2025 would be adjusted to ‘strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine cars’.
However, the supporting Budget document revealed that Ms Reeves’ plot to extend the tax gap to greener vehicles is by doubling first-year VED rates – also known as ‘showroom tax’ – for petrol, diesel and many hybrid cars.
Experts have labelled it a stealth tax on drivers and a ‘shove, not a nudge’ towards an electric car future.
For cars producing the highest emissions in excess of 255g/km CO2, first-year VED is set to cost an eye-watering £5,490.
We’ve picked 10 models that fall into this bracket.
1. Alfa Romeo Stelvio Quadrifoglio
First-year tax cost: 6.2% of RRP
Alfa Romeo’s sporty Stelvio Quadirifoglio SUV is one of the 10 relatively popular models that will be stung by the Chancellor’s doubling of first-year VED rates for new models
Alfa Romeo’s Stelvio SUV might be a sensible family car in standard form. However, the Quadrifoglio example – powered by a 527bhp 2.9 V6 bi-turbo petrol engine – is anything of the sort. This super-SUV can accelerate from zero to 62mph in just 3.8 seconds and has a top speed of 177mph.
But it also puts out 267g/km CO2, placing it in the highest VED band. As such, any that’s registered from 1 April 2025 will cost £5,490 to tax for the first year, which is equivalent to 6.2 per cent of the Alfa’s £88,645 retail price.
2. Ford Mustang
First-year tax cost: 9.9% of RRP
The new Mustang is Britain’s most affordable new model with a V8 engine, starting from just over £55k. But with its high CO2 emissions, examples registered after 1 April will cost £5,490 to tax for the initial 12 months
Ford’s iconic Mustang pony car is among the ten relatively popular motors that will be caught out by Reeves’ VED sting from next year, thanks to its high CO2 emissions of 274g/km putting it in the priciest tax band.
The new seventh-generation American muscle car is only the second to be sold in Britain as a genuine – right-hand-drive – UK model. But Ford has decided to ditch the four-cylinder Ecoboost engine option and will sell only the 5.0-litre V8. It’s the cheapest V8 sold on these shores, but first-year VED at £5,490 is equivalent to 9.9 per cent of a Mustang’s £55,725 entry price.
3. Ford Ranger Tremor & Wiltrak X (2.0L diesel)
CO2 emissions: 270g/km (Tremor)
First-year tax cost: 12.9% of RRP
The Ford Ranger double cab with the 2.0-litre turbodiesel ‘EcoBlue’ engine in Tremor (pictured) and Wildtrak X trims will both get hit with the first-year VED hike in 2025
The second Ford on this list is the Ranger pick-up – though we should immediately point out that some variants don’t fall into the highest VED band. The double cab Tremor and Wiltrak X versions powered by the 2.0-litre turbodiesel EcoBlue engine do, however, thanks to CO2 outputs in excess of 270g/km.
It’s a double blow for the popular Ford truck, with a change in rules next year also seeing all double-cab pick-ups no longer qualify as commercial vehicles and instead be treated as passenger cars. As such, Benefit in Kind (BiK) tax rates will rise dramatically for this type of vehicle. Combined with jaw-dropping first-year VED, the Ranger won’t be as appealing as it has been previously.
4. Ineos Grenadier
First-year tax cost: 8.4% of RRP
The Ineos Grenadier, with both the petrol and diesel engine, will fall into the highest VED band, meaning a ‘showroom tax’ in the first year of £5,490
This won’t make pleasant reading for Ineos’ billionaire boss, Sir Jim Ratcliffe. His first automotive product, the Grenadier, is one of the ten cars we’ve picked out as being clobbered by Reeves’ doubling of first-year VED rates from next year.
This is the case for both the petrol and diesel 3.0-litre straight-six BMW-supplied engines. For a standard Grenadier, entry pricing for the unleaded and oil burner is the same, both starting from £65,015. With CO2 outputs of 325 and 286g/km respectively, first-year VED on both will be equivalent to 8.4 per cent of the entry RRP.
5. Jeep Wrangler Rubicon
First-year tax cost: 8.7% of RRP
The range-topping Jeep Wrangler Rubicon, which costs from £63,125, is another car that sits in the highest VED banding
Anyone ordering a new Jeep Wrangler – which isn’t that many people in the UK, in the grand scheme of things – from April next year will probably be inclined to dodge the Rubicon version, as its CO2 output of 269g/km put it in the 5,490 first-year VED tax band.
If they choose the lower Sahara trim with the same 2.0-litre petrol engine and emissions of 250g/km CO2, it drops down by one band in the VED standings. Even then, buyers will have to fork out £4,680 in VED for the first 12 months.
6. Land Rover Defender 90/110 V8 petrol
First-year tax cost: 5.9% of RRP
Choose the V8 petrol engine for a Land Rover Defender 90 or 110 and you can expect to be paying almost £5,500 for first-year VED
The new Land Rover Defender has been a real success story for the British marque; it’s the manufacturers best-selling model since entering the market in 2020, and by some distance. But buyers tempted by the gutsy V8 option might be slightly put off by its doubling in first-year VED costs from 1 April 2025.
With 316g/km CO2 (Defender90), it is miles above the 255g/km threshold. However, given the £93,500 starting price in Defender X trim, that tax outlay for the first 12 months is equivalent to just 6 per cent of the RRP.
7. Land Rover Range Rover V8 petrol/RR Sport SV
CO2 emissions: 261g/km (RR Autobiography)
First-year tax cost: 3.9% of RRP
High spec variants of the Range Rover and Range Rover Sport are both sold with 4.4-litre petrol engines. These have emissions worthy of the highest tax band
As with the Defender above, customers opting for the punchiest 4.4-litre V8 petrol engine in the latest Range Rover and Range Rover Sport can expect to fork out big on first-year road tax.
The £142,400 Range Rover Autobiography specced with the P530 mild hybrid petrol engine puts out 261g/km CO2 (the Sport with the more potent P635 is 272g/km). Both are not what you’d call cheap cars, though, so the extortionate VED rates for the first year might just be a drop in the ocean for Land Rover’s deepest-pocketed customers.
8. Maserati Levante V6 petrol
First-year tax cost: 4.8% of RRP
Maserati’s range-topping Levante Modena Ultima SUV with a 3.0-litre V6 petrol engine is another luxury motor that will cost almost £5,500 to tax for the first 12 months from being registered next year
Maserati’s Levante is a plush but sporty SUV to rival luxury models like the Range Rover Sport and Porsche Cayenne. So, it shouldn’t come as a huge surprise that versions fitted with its most potent petrol engine kick out plenty of CO2 and therefore sit in the £5,490 first-year VED band.
Maserati has dramatically slashed its Levante range in 2024 to just two options. And t is the more expensive £115,215 Levante Modena Ultima that is set to be thumped by the Chancellor’s VED hike. This version is powered by a 3.0-litre V6 powerplant putting out 436bhp and can accelerate to 62mph from a standstill in a mere 5.2 seconds.
9. Porsche Cayenne
First-year tax cost: 7.2% of RRP
Porsche’s super-popular Cayenne is one of the models that teeters on the highest VED band line. The entry version has a quoted CO2 emissions range of 246 to 275g/km, so choosing bigger wheels and the wrong options could tip it into the £5,490 VED group
Porsche’s biggest SUV, the Cayenne, is also its best-selling model – well, it was in 2023, anyway. Customers have the option of hybrid or petrol drivetrains, though buyers need to tread with caution if they want the latter because even a standard Cayenne could slip into the highest first-year VED band.
While the S and GTS have CO2 emissions above 255g/km across the board, spec an entry £76,000 Cayenne with bigger wheels and the wrong options and it can break into the £5,490 showroom tax group. Porsche quotes CO2 emissions at between 246 and 275g/km for the entry Cayenne. The E-Hybrid variant puts out a claimed 33 to 42g/km, which means first-year VED at just £110 in comparison, despite having the same 3.0 V6 petrol engine under its bonnet. With the hybrid priced from £84,800, the £8,800 cost difference is shaved to just £3,420 once taking into account the first-year VED cost.
10. Porsche Macan S/GTS
First-year tax cost: 8.7% of RRP
Like the Porsche Cayenne above, a Macan S can easily fall into the highest VED band if a customer chooses simple options, like bigger wheels. As such, buyers of the compact SUV next year could be forking out £5,490 for road tax in the first 12 months
The German sports car company has taken a bold decision with its latest Macan; it is being sold exclusively as an EV. However, petrol versions of the previous-generation car remain on sale for those who don’t want to switch to battery power just yet. But while the Macan EVs will cost just £10 for road tax in the first 12 months, the combustion Macan S and GTS variants are likely to cost £5,490.
For the 375bhp Macan S – with a twin-turbocharged 2.9-litre V6 engine – the CO2 emissions range is 251 to 265g/km depending on spec. Like the Cayenne, bigger wheels could push your first-year VED costs to the highest level. Every GTS version (costing from £75,000) emits over 255g/km CO2.
Reeves’ tax raid on new petrol and diesel cars in detail
The Budget document revealed that all zero-emission electric cars will pay the lowest first-year tax rate of just £10 as part of increased efforts to convince drivers to go green.
This will be retained until 2029-30 to incentivise drivers to switch to greener cars, with the Labour government standing by its manifesto promise to ban the sale of new petrol and diesels in 2030.
To also encourage motorists to buy hybrid models in the interim, new examples with emissions between 1 and 50g/km CO2 (which is achieved only by plug-in hybrid models) next year will be subject to £110 first-year VED rates.
For plug-in hybrids emitting between 51 and 75g/km CO2, the showroom tax in 2025-26 will be £130.
But in a blatant move to discourage drivers from buying new petrol and diesel cars, first-year VED rates applied to all combustion engined models registered from 1 April 2025 will effectively double.
The Budget document revealed that Rachel Reeves will DOUBLE first-year VED rates for all new petrol and diesel models from 1 April 2025
The Chancellor said the government will change VED first-year rates to ‘strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine cars’
‘All other rates for cars emitting 76g/km of CO2 and above will double from their current level for 2025-26,’ the document states.
The lowest first-year VED rate for petrols and diesel with emissions of 76-90g/km currently rings in at £135 today.
However, from 1 April, this will rise by 100 per cent to £270.
Even most small conventional ‘self-charging’ hybrid vehicles have CO2 emissions above this threshold.
Toyota’s Yaris hybrid, even in its least-polluting specification, puts out 91g/km CO2 and therefore will be stung with the double tax rise, increasing from £175 if you buy a new one today to £350 if you were to order one after 1 April 2025.
Even small conventional hybrid cars will be stung by first-year tax rate increases. A Toyota Yaris hybrid, considered one of the greenest superminis on the market, can’t escape – buyers of new models from 1 April will have to pay £350 for VED in the first year, up from £175 currently
Families buying a modest Nissan Qashqai with a 1.3-litre mild hybrid petrol engine will incur first-year VED costs of £540 from 1 April
Even the most frugal and economical new cars with ‘mild-hybrid’ (offering a little electric assistance without sending any e-power to the wheels) internal combustion engines emitting between 101-110g/km C02 will suffer the first-year road tax hike, riding to £390 from £195 previously.
A family buying a brand new 1.3-litre mild-hybrid petrol Nissan Qashqai (which emits 144g/km of CO2) would have to pay an extra £540 (up from £270) in the first year under the new rules.
Yet the biggest sting will be for buyers of the most polluting vehicles.
| Emissions (g/km) CO2 | 2024-25 first-year VED rate | 2025-26 first-year VED rate |
|---|---|---|
| 0* | £0 | £10 |
| 1-50** | £10 | £110 |
| 51-75** | £30 | £130 |
| 76-90 | £135 | £270 |
| 91-100 | £175 | £350 |
| 101-110 | £195 | £390 |
| 111-130 | £220 | £440 |
| 131-150 | £270 | £540 |
| 151-170 | £680 | £1,360 |
| 171-190 | £1,095 | £2,190 |
| 191-225 | £1,650 | £3,300 |
| 226-255 | £2,340 | £4,680 |
| Over 255 | £2,745 | £5,490 |
| *only EVs **only plug-in hybrids | ||
Buyers of a mild-hybrid diesel Range Rover that emits 194g/km CO2 will be hit with a showroom tax cost of £3,300
Performance cars will be stung very hard by the tax changes. A BMW M4 – which emits between 226 and 230g/km CO2 – will cost £4,680 to tax for the first year
Any petrol or diesel car with emissions of 191-225g/km CO2 will be upped to £3,300 (from £1,650) for the first year. This would include a new mild-hybrid diesel Range Rover, which has claimed CO2 emissions of 194g/km.
The initial VED costs for a brand new vehicle putting out 226-255g/km CO2 will be hiked to £4,680 (from £2,340). This would hook cars like BMW’s latest M4 performance coupe, which emits between 226 and 230g/km CO2.
Changes to VED will raise £400million for the Treasury, Reeves told MPs during her statement on 30 October.
From a car’s second year, all models will be subject to a standard rate of VED, which currently stands at £190 for petrols and diesels and £180 for hybrids. EVs are also expected to be subject to a lower standard rate from next year.
This rate could increase with RPI from next year, though.
Steve Gooding, director of the RAC Foundation, described the move as ‘less of a nudge and more of a shove to change buyer behaviour in the showroom’.
He said while it might appear to be an effective way of incentivising buyers to go electric, it could simply see drivers keep their older, more polluting cars for longer.
Nicholas Lyes, IAM RoadSmart director of policy and standards, said that increasing VED on all but zero emission vehicles in the first year will ‘hit those buying new conventional vehicles in the pocket’.
He added: ‘A better solution to incentivise the take-up of electric vehicles would have been to cut VAT on the sale of new electric vehicles with list price of £40,000 and under.’
Also commenting on the stealth tax on new petrol and diesel cars, Paul Barker, editor at car magazine Auto Express, said: ‘Doubling first-year VED rates for anything over 76g/km alongside big hikes for non-EVs below that adds a notable cost, especially for high-polluting cars over 255g/km that will now cost almost £5,500 in first-year VED alone.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
