Road Tax Set to Skyrocket in April 2025: What New Car Buyers Need to Know
New Vehicle Tax Rates Set to Increase from April 2025: How Drivers Will Be Affected
Starting from April 1st, 2025, Vehicle Excise Duty (VED) rates will see a significant rise for new car buyers, including substantial increases for electric vehicles (EVs) and hybrid models. These changes are set to impact drivers' wallets, especially those purchasing new cars after this date.
Electric Vehicles (EVs)
Previously, EV drivers enjoyed an exemption from paying VED, but under the new rules, they will no longer be exempt. New EVs will be subject to a £10 charge for the first year, after which the standard annual rate of £195 will apply. While this represents a small increase from the previous system, it marks a significant shift in how EVs will be taxed going forward.
Plug-In Hybrids and Low Emission Cars
For cars emitting between 1-50g/km of CO2, which mostly include plug-in hybrid vehicles, the first-year road tax will rise to £110. This is a significant increase from the current £0 rate for hybrids, and it will now match the tax rate for many petrol and diesel vehicles in this low-emission band.
Mid-Range Emissions
Vehicles emitting between 51-75g/km of CO2 will also see an increase in road tax. Previously, hybrids in this range paid £20, while regular petrol and diesel cars were charged £30. From April 2025, however, the first-year tax for all cars in this group will rise to £135.
High Emission Vehicles
The most significant changes will impact cars with higher CO2 emissions. Vehicles emitting 76g/km of CO2 or more will see a dramatic rise in road tax. For example, cars in the highest emissions bracket, such as those with emissions of 255g/km, will see their tax rise from £2,745 per year to a staggering £5,490 annually. This represents a doubling of the rate for the most polluting vehicles on the road, reflecting the government's efforts to push for greener transportation options.
Expensive Car Supplement
In addition to the increased VED rates, buyers of new vehicles priced over £40,000 will face an "expensive car supplement." This supplement adds an extra £410 to the annual road tax bill for the first five years of ownership. From April 2025, this charge will apply to EVs as well, further increasing the cost of owning a high-priced vehicle.
Why These Changes Are Happening
The government is introducing these changes as part of a broader strategy to reduce emissions and encourage the adoption of cleaner, more sustainable vehicles. By raising taxes on higher-emission cars, the hope is to incentivize the transition to greener alternatives, such as EVs and hybrids, and make ownership of more polluting vehicles less financially attractive.
While the changes may have a substantial impact on some drivers, they also present an opportunity to purchase vehicles before the tax increases take effect. For those looking to avoid the higher VED rates, now may be the time to buy.
What Does This Mean for You?
For anyone planning to purchase a new car after April 1st, 2025, it's essential to consider the new road tax rates in your decision-making process. Whether you're eyeing an EV, hybrid, or petrol/diesel vehicle, the financial implications of these changes could be significant, especially if you’re considering a high-emission car or a vehicle over the £40,000 threshold.
These upcoming changes to VED represent a clear shift in the government’s strategy to encourage environmentally friendly driving while discouraging higher-emission vehicles. Make sure to plan ahead and consider these factors when purchasing your next car.