Car Tax Guide 2025 - Everything You Need to Know

On the 1^st of April 2025, UK car tax (Vehicle Excise Duty, or VED) changes will come into effect, affecting petrol, diesel, hybrid, and electric vehicle drivers. These changes include significant increases in first-year tax rates for new vehicles, higher standard road tax rates for most cars, and the introduction of road tax for electric vehicles, which were previously exempt.

We're here to break down these tax updates, so you're fully prepared and aware of your options - no surprises, just smart choices!

From the 1^st of April 2025, the following updates will take effect:

• Electric vehicles (EVs) will lose their tax-free status
• First-year road tax will increase
• Standard road tax (VED) will increase
• The expensive car supplement will apply to EVs
• Electric vans and motorcycles will also be taxed

Electric vehicle drivers have been able to enjoy the perk of no VED charges, but come April, here’s what’s changing.

• New electric vehicles registered on or after the 1st of April 2025 will pay £10 in first-year road tax and from the second year onwards, it will increase to the standard rate of £195. 
• If the original list price exceeds £40,000, you will pay the standard rate of £195, plus the expensive car supplement for 5 years from the start of the second licence (second time the vehicle is taxed). The expensive car supplement is £425, amounting to £2,125 over 5 years.
• Electric vehicles registered between 1st of April 2017 and 31st of March 2025 will now pay the standard road tax rate of £195 per year from the 1^st of April.
• Older electric vehicles registered between 1st of March 2001 and 30th of March 2017 will now pay £20 road tax per year from the 1st of April.
• Most electric vans will move to the standard annual rate for light goods vehicles, which is £355, matching petrol and diesel vans.
• Electric motorcycles and tricycles will move to the annual rate for the smallest engine size which is £25 per year.

• Older hybrids and AFVs registered before the 1st of April 2017, the £10 annual discount will be removed, and the rate will depend on the vehicle's CO2 emissions.
• Hybrids and AFVs registered on or after the 1st of April 2025 will now pay the standard rate of £195.

When you buy a brand-new car, the first year of tax is based on CO₂ emissions, so it is different to the standard tax rate. These rates are increasing sharply from April 2025, some are increasing to triple the original. Here’s how the tax bands will look for petrol, hybrid, and RDE2-compliant diesel vehicles from April 2025, based off emissions:

Once a car has passed its first year, it moves to a standard annual tax rate of £195 (previously £190).

From April 2025, for all cars registered after the 1^st of April 2017 this will be:

• £195 per year for petrol, diesel, hybrid, and electric cars (previously, electric cars paid nothing, but they’ll now be taxed at the same rate as petrol and diesel cars).
• Plus, you will need to pay the expensive car supplement for the second to sixth year your car is on the road if the car was originally priced over £40,000 (this was previously £410 per year and now includes electric vehicles).

If your car was registered between 1^st of March 2001 and 31^st of March 2017, its road tax is still based on CO₂ emissions. However, some tax bands are increasing by £5-£25 per year:

With these new rules, choosing the right car can save you hundreds (or even thousands) in tax. If you want a fuel-efficient or electric vehicle, now is the time to buy!

These changes will impact millions of UK drivers, so make sure you’re prepared. Whether you own an EV, a petrol or diesel car, or are planning to buy a new or used vehicle, these tax updates could affect your budget.

Will your car be affected? Check your current road tax rate so you’re not caught off guard! https://www.gov.uk/vehicle-tax-rate-tables

If you're a Motability customer, there’s good news - the upcoming road tax changes won’t affect you. As part of the Motability Scheme, your tax is already covered, and this will remain unchanged even after the new rules take effect.

That means whether you’re renewing your current vehicle or considering a new one, you won’t have to worry about rising tax costs. Your Motability lease will continue to include tax, insurance, servicing, and breakdown cover, keeping your motoring expenses predictable and hassle-free.