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The cost of motoring has surged under Labour as cash-strapped drivers face paying record amounts of VAT, analysis reveals. Figures show consumer spending on buying and running vehicles hit £78.3billion during the first six months of 2025. This was up from £76billion for the same period last year, when the Tories were in government. It means VAT receipts raked in by the Treasury jumped from £12.6billion to more than £13billion over the two periods - a surge of £375million, according to analysis of Office for National Statistics data by the AA. Chancellor Rachel Reeves’s department is now on course to bank up to an extra £750million in VAT from drivers this year, which would set a new record. It also means more was raked in between January and June from VAT on drivers than fuel duty (£12.1billion), traditionally the biggest tax on motoring. Critics accused Ms Reeves of making drivers pay for her mistakes as the increase is likely due to spiralling inflation and her National Insurance raid on businesses, which forecourts and garages have been forced to pass on. They also urged the Chancellor to spare motorists from any tax hikes in next month’s Budget. Ms Reeves froze fuel duty in last year’s Budget but there are fears she could hike it this year as she scrambles to fill a black hole in the public finances of as much as £30billion. Richard Holden MP, the Tories' Shadow Secretary of State for Transport, said: 'Motorists are paying through the nose for the fact that spineless Sir Keir Starmer came to power without a plan and has driven costs up due to Labour’s National Insurance tax hikes and increases in Business Rates. 'Labour’s panicked tax grab on motorists has also placed a rocket under inflation that has almost doubled under Labour already. 'Drivers shouldn’t have to pay the price for Labour’s failures. Rachel Reeves should hit the brakes and rule out further stealth taxes on drivers who are already paying the price for Labour’s failure.' Tory MP Greg Smith said: ‘Outside the metropolitan bubble, the majority of people are reliant on cars to get about, go to work, take the kids to school or do the family shop. ‘Indeed, 90 per cent of all passenger miles travelled in the UK are by car. So why does Labour hate the motorist so much, viewing drivers as bottomless cash pits, not real people trying to go about their daily lives?’ Edmund King, President of the AA, said: ‘Drivers are worried that they will be a prime target for increased motoring taxation as the Chancellor seeks to increase her income. ‘Yet the latest Office for National Statistics consumer spending statistics reveal the hidden tax already taken from drivers. ‘The danger of ramping up motoring costs further is that it hammers working people, adds costs to deliveries and businesses — and ultimately fuels inflation. ‘The Budget should not be an excuse for rampant cash-guzzling from motorists. ‘The private motorist is not a bottomless pit from which the authorities can help themselves to cash whenever they want to – whether that is tax, parking charges, congestion charges and fines.’ The analysis looked at figures covering the amount spent by motorists, from buying a vehicle to spending on fuel, road tax and maintenance costs. Higher inflation means all of these are costing more, with VAT receipts surging as a result. The CPI rate of inflation dropped to 2 per cent in June 2024, a month before the general election, but has since nearly doubled to 3.8 per cent. Several motoring businesses, such as Kwik Fit and Arnold Clark, also warned Ms Reeves that her National Insurance raid would be passed onto drivers. For the whole of last year, consumer spending on vehicles hit £137billion. That generated £22.8billion in VAT, with a further £24.6billion coming from fuel duty and around £8billion from road tax. The RAC’s Simon Williams said: ‘Driving is a must for so many people, yet the costs are running ever higher. ‘We urge the Government not to hit drivers in the pocket at next month’s Budget.’ The Treasury was contacted for comment.
