Rachel Reeves could force nearly half of all drivers to abandon their vehicles as hikes to Vehicle Excise Duty costs virtually double for millions.
The warning comes after fresh research indicated that 41 per cent of working adults fear they will need to surrender their cars this year if transport costs continue their upward trajectory.
The financial squeeze follows warnings that refuelling a typical 50-60 litre tank could surge by as much as £20 annually, potentially becoming the breaking point for cash-strapped motorists.
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These mounting pressures stem from sweeping VED changes announced by Reeves during last year’s Autumn Budget, which took effect in April and have already significantly impacted petrol and diesel car owners across the country.
Car tax hikes will see some vehicles pay as much as £5,490 under the new VED rates | X/DVLA/PAThe new tax structure represents an almost complete doubling of first-year ownership costs for many vehicles, with cars producing between 76 and 90 grams of CO2 per kilometre now attracting fees of £270, up from the previous £135.
For the most polluting vehicles emitting over 255g/km, annual payments have soared from £2,745 to £5,490.
These dramatic increases form part of the Treasury’s broader revenue-raising strategy, with motorists bearing a substantial burden through various taxation mechanisms.
The changes affect all new car purchases, with even relatively efficient vehicles facing significant cost increases that add hundreds of pounds to annual motoring expenses.
New car tax changes were introduced in April for all vehicle owners | X/DVLAThis represents one of the steepest rises in vehicle taxation in recent years, fundamentally altering prices associated with car ownership for millions of households.
The geographical impact of these tax changes varies dramatically across Britain, with certain cities showing far higher rates of potential car abandonment than others.
Plymouth emerged as the most affected area, where more than half of the motorists surveyed were contemplating ditching their vehicles in favour of public transport.
Brighton followed closely with 48 per cent of drivers considering abandonment, while Birmingham and Manchester both registered 44 per cent, and London sits at 43 per cent. Liverpool recorded 42 per cent of motorists contemplating giving up their vehicles, with Glasgow at 41 per cent and Southampton at 40 per cent.
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The impact appears less severe in other regions, with Belfast showing the lowest rate at just 26 per cent, while Leeds and Edinburgh both recorded 31 per cent of drivers considering abandoning their cars.
But it’s not just average drivers that have been impacted by the Chancellor’s taxes. Company car drivers have also faced particularly severe financial changes, with Benefit-in-Kind tax rates set to increase dramatically from 2028-29.
Electric company vehicles currently taxed at two per cent will see rates jump to seven per cent in 2028-29 and nine per cent by 2029-30, according to new HMRC tax bands.
Plug-in hybrids face even steeper rises, climbing to 18 per cent in 2028-29 and 19 per cent the following year, irrespective of their electric range capabilities.
Double cab pick-up trucks were reclassified as company cars under the new tax rules
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PADouble cab pick-up truck drivers have already experienced significant cost increases following April’s reclassification from vans to cars for tax purposes.
This change has pushed annual costs from £3,960 to as much as £10,094 for vehicles with a 37 per cent BiK rate, representing a 154 per cent increase in tax liability.
The broader financial strain has led many motorists to delay essential vehicle maintenance, with experts warning that this could prove costly in the long term.
“Cutting back on car repairs may initially save households some cash; however, neglecting vehicle maintenance is very risky and can end up costing much more in the long run,” cautioned a spokesperson from car repair finance company Bumper.
