If you own a car or are planning to buy one in the UK, major changes to vehicle taxation are coming in April 2025. These changes, announced by the government, aim to modernize road tax policies and ensure that all drivers contribute fairly to maintaining the country’s road infrastructure. Here’s what you need to know about the upcoming updates to UK car tax.
1. Road Tax for Electric Vehicles (EVs)
One of the most significant changes in 2025 is that electric vehicles (EVs) will no longer be exempt from Vehicle Excise Duty (VED). Currently, EV owners pay zero road tax, but from April 2025, they will be required to pay the same standard rate as petrol and diesel cars.
How Much Will EV Owners Pay?
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First-year rate: New EVs registered from April 2025 will pay the same first-year tax rate as the lowest-emission petrol and diesel cars, currently set at £10.
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Standard rate (after the first year): From the second year onwards, EVs will be subject to the standard VED rate, which is currently £180 per year (subject to government updates).
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Expensive car supplement: EVs with a list price over £40,000 will also have to pay the additional ‘expensive car’ charge, which is currently £390 per year for five years.
2. Changes for Petrol and Diesel Cars
While the biggest changes affect EVs, petrol and diesel cars will also see adjustments:
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Vehicles registered from April 2025 will continue to be taxed based on their CO2 emissions in the first year, but rates may increase.
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After the first year, the standard VED rate applies, which could be revised in the upcoming budget announcements.
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The expensive car supplement remains in place for vehicles costing over £40,000.
3. New Tax Rules for Hybrid Vehicles
Hybrid vehicles (both plug-in and mild hybrids) will also be affected by the changes. Currently, they receive a small discount compared to petrol and diesel cars, but from April 2025, they will be subject to the same standard tax rates as conventional fuel cars.
4. Changes to Vehicle Tax Bands
From April 2025, the government is updating the VED tax bands for newly registered vehicles. The key changes include:
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CO2-Based Tax Bands Adjusted: The tax brackets for new petrol and diesel cars will be revised, meaning vehicles with higher emissions will face increased first-year rates.
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Flat Standard Rate Introduced: After the first year, all vehicles (except zero-emission EVs) will transition to the standard flat rate, expected to be around £180 per year.
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Older Vehicles Impacted: Cars registered between 2001 and 2017, currently taxed based on CO2 emissions, will move to a simplified standard rate system.
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Luxury Car Tax Still Applies: Vehicles with a list price exceeding £40,000 will continue to pay the additional ‘expensive car’ supplement of £390 annually for five years.
5. Older Cars Will Also Be Affected
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Cars registered between 2001 and 2017: Older vehicles, which currently fall under the CO2-based tax bands, will see a shift to the standard flat rate for all cars.
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Pre-2001 cars: These will continue to be taxed based on engine size.
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Classic cars (over 40 years old): Will remain exempt from road tax.
6. Why Are These Changes Happening?
The government argues that road tax exemptions for EVs were introduced to encourage the switch to greener vehicles, but with EV adoption rising, they believe it’s now time for EV owners to contribute. The revenue collected will help fund road maintenance and infrastructure improvements as fuel duty revenues decline due to reduced petrol and diesel consumption.
7. What This Means for Drivers
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If you own an EV or are considering buying one, be prepared for additional annual costs from April 2025.
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Petrol and diesel car owners should stay informed about potential tax increases.
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Hybrid vehicle owners will also lose their lower-tax advantage.
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If you own a car worth over £40,000, factor in the expensive car supplement.
Final Thoughts
The April 2025 car tax changes mark a significant shift in UK motoring costs, particularly for EV owners who have enjoyed tax-free driving until now. While this move is aimed at creating a fairer system, it may influence buying decisions and could slow down EV adoption. If you're planning to buy a new car, it’s crucial to consider these tax changes and their long-term financial impact.
Stay updated with the latest tax rates and announcements by checking the official UK government website or consulting a vehicle tax expert before making any big car-related decisions.
