The UK government is going to do some changes in Vehicle Excise Duty (VED) from April 1, 2025. These changes will impact car owners, including electric vehicle (EV) drivers, hybrid vehicle owners, and those with high emission vehicles.
In this expert analysis, we will cover everything you need to know about the UK car tax changes in 2025, including updated rates, new rules, and their implications. I’ll explain exactly what these changes mean for drivers, backed by official government sources and industry data.
UK Car Tax Key Changes: April 2025
| Change | Previous Rule | New 2025 Rule |
|---|---|---|
| EV Tax Exemption Ends | £0 first-year and standard rate | £10 first-year + £195 standard |
| Luxury EV Supplement | No supplement for EVs | £425/year (years 2-6 if >£40k) |
| High-Emission Car Penalties | Up to £2,745 first-year tax | Up to £5,490 first-year tax |
| Pre-2017 Vehicle Rates Increase | £0 for 0-100g/km band | £20 standard rate |
- EV owners no pay VED for the first time.
- Luxury car owners face higher costs.
- Gas guzzlers get significantly more expensive
- Older eco cars now also pay the Tax.
Standard VED Rates for 2025:
The standard yearly VED rate will be £195 for most of the vehicles. Also, if your vehicle’s list price more then £40,000, you will be required to pay an extra £425 annually for the first five years of ownership.
First Year VED Rates Based on CO₂ Emissions, these rates are provided by the HM Treasury reports and official GOV.UK documents.
| Vehicle Type | First-Year Rate | Standard Rate | Expensive Car Surcharge |
|---|---|---|---|
| New EV (April 2025) | £10 | £195 | £425 (if >£40k) |
| Petrol (76-90g/km) | £270 | £195 | £425 (if >£40k) |
| Diesel (255g/km+) | £5,490 | £195 | £425 (if >£40k) |
| Pre-2017 (0-100g/km) | N/A | £20 | N/A |
Electric and Hybrid Vehicle Tax Updates:
The most important UK car tax changes 2025 is seen in electric and hybrid vehicles, which were previously exempt from VED. Same case with the Expensive Car, if your EV costs over £40,000, you’ll pay an extra £425/year for years 2–6 (same as petrol/diesel cars).
In this EVs which are registered from April 1, 2025 will pay £10 in the first year, then the standard £195 annually from the second year.
Those Existing EVs which are registered between 2017 and 2024 will also start paying £195 per year from April 2025.
Also Hybrid vehicles which are no longer receive a £10 discount, meaning their tax rates will align with petrol and diesel vehicles.
High Emission Vehicles Face Increased Charges:
Vehicles which are emitting over 255 g/km of CO₂ will see a dramatic tax increase . First Year Rate will be £5,490 and the Affected Models like Luxury and high performance vehicles from brands like Audi, BMW, Maserati, and Rolls Royce will also impacted.
This tax adjustment aims is to the stop the purchase of high emission vehicles, aligning with the UK’s Net Zero goals for 2050.
Fuel Duty Freeze Extended Until March 2026:
The government of United Kingdom has extended the fuel duty freeze for another year, it helps in financial burden on motorists. This move is expected to save an average driver £59 per year.
These details are based on Chancellor Jeremy Hunt’s 2024 Spring Budget announcement and official UK fuel tax data, calculate fuel cost every time to maintain to your budgets.
Not only VED, UK residents also be aware of other financial changes in 2025 like hikes of up to 15.6% in the Council Tax. Also the energy price cap changes may lead to higher household expenses.
If you want to minimize the financial impact of these changes follow some steps:
- Switch to a low emission vehicle to benefit from lower tax rates.
- If you are buying a new vehicle, check the CO₂ emission band to avoid high first year VED charges.
- For EV buyers, buy before April 2025 to take advantage of current tax exemptions.
- Renew tax before 31 March 2025 to lock in 12 extra months tax free.
- Purchase before April to avoid the £425/year surcharge.
- Switch to EVs now before higher costs kick in.
Important FAQs:
1. What are the changes to road tax in 2025 in the UK?
From April 2025, electric cars will no longer be tax-free. EVs will pay £10 in the first year and £195 yearly after that. Cars over £40,000 will have an extra £425 yearly tax for five years. High-emission cars will face up to £5,490 first-year tax.
2. How much will my road tax be from April 2025?
Most cars will be taxed at £195 per year. Vehicles over £40,000 will pay £425 extra for five years. High-emission cars (255 g/km CO₂) could pay up to £5,490 in the first year.
3. How do I claim my 50% road tax reduction?
You may qualify for a 50% road tax discount if you receive Higher Rate DLA Mobility or Enhanced Rate PIP Mobility. Apply through the DVLA VED Exemption Form (V149) with proof of eligibility.
4. Is car tax going up for older cars?
Yes, electric cars registered before 2025 will start paying £195 per year from April 2025. Petrol and diesel cars will see higher first-year VED for high emissions.
5. At what age do you stop paying car tax?
Cars over 40 years old (registered before April 1, 1985) are road tax-free if not used for business. Owners must apply for Historic Vehicle Tax Exemption with the DVLA.
6. Are older vehicles made before 1984 exempt from tax rates coming for 2025?
Yes, vehicles built before January 1, 1984, are already exempt from road tax and will stay tax-free in 2025 under the UK Historic Vehicle Tax rule.
Conclusion:
The changes to UK car tax in 2025 mean that more drivers will now have to pay vehicle tax, including those who own electric or low-emission cars. The government is making this change so that all drivers help cover the cost of using and maintaining the roads. Even some electric cars that were free from tax before will now have to pay, depending on their value and type.
For drivers, this means it’s important to be aware of the new rules and think about how it might affect their car costs each year. If you’re planning to buy a new car or already own one, it’s a good idea to check how much tax you’ll need to pay. Knowing these changes can help you make better choices and avoid any surprises later on.