UK Car Tax Overhaul: What You Need to Know for 2025
Big changes to UK Vehicle Excise Duty (VED), commonly known as car tax, are coming into effect on April 1, 2025. These updates will impact all drivers, whether you own a petrol, diesel, hybrid, or electric vehicle (EV).
The most significant shift? Electric vehicles will no longer be exempt from road tax. Additionally, first-year tax rates for newly registered cars will see sharp increases, while standard annual road tax is set to rise for most vehicles.
Rising First-Year Road Tax for New Cars
If you’re planning to buy a brand-new car, be prepared for higher first-year tax rates based on CO₂ emissions. From April 2025, these charges will increase significantly:
- 0g/km: £10 (previously £0)
- 1-50g/km: £110 (previously £10)
- 76-90g/km: £270 (previously £135)
- 151-170g/km: £1,360 (previously £680)
- Over 255g/km: £5,490 (previously £2,745)
EV Owners: Prepare for New Tax Charges
Until now, EVs have been exempt from VED, but that will change in 2025. Here’s what EV owners need to know:
- New EVs registered on or after April 1, 2025: First-year road tax will be £10. If the car originally cost over £40,000, an additional “expensive car supplement” of £425 per year will apply for five years.
- EVs registered between April 1, 2017, and March 31, 2025: Standard road tax of £195 per year will apply.
- Older EVs (registered between March 1, 2001, and March 30, 2017): These will now be taxed at £20 per year.
- Electric vans: A flat annual rate of £355 will be introduced, bringing them in line with petrol and diesel vans.
Standard Road Tax (VED) from April 2025
For all cars registered after April 1, 2017, the new annual tax rates will be:
- £195 per year for petrol, diesel, hybrid, and electric cars.
- £425 per year for five years on cars that originally cost over £40,000.
What About Older Cars?
Owners of vehicles registered between March 1, 2001, and March 31, 2017, will also see increases in VED, based on CO₂ emissions. Here’s a sample of the upcoming changes:
- 0-100g/km: £20 (previously £0)
- 201-225g/km: £430 (previously £415)
- Over 255g/km: £760 (previously £735)
How Much Will Your Car Tax Increase?
For most drivers, road tax will rise in 2025. The biggest impact will be on EV owners, who will now need to factor VED into their running costs.
To avoid surprises, check the government’s car tax rate tables and plan accordingly, especially if you’re considering a new or used car purchase.
How to Minimize Your Car Tax Costs
If you’re looking to save money on road tax, here are some tips:
- Buy an EV before April 2025 – Vehicles registered before this date won’t be subject to the expensive car supplement.
- Opt for a lower-emission petrol or diesel model – This can help reduce first-year tax costs.
- Renew your EV’s road tax before April 2025 – Lock in one more year of tax-free driving.
At Carlover, we offer fantastic deals on fuel-efficient and electric vehicles. Browse our listings today and find the perfect car before these new tax rates take effect!