April 2025 Car Tax Hikes: New Rates and Surprising Costs for Drivers

From April 1, 2025, the UK government is set to introduce significant changes to Vehicle Excise Duty (VED), commonly known as car tax. These changes will impact millions of drivers, including owners of electric vehicles (EVs), hybrids, and high-emission cars. Many motorists will see substantial increases in the amount they pay, with some facing hikes of over £2,000 per year.

Below is a full breakdown of the upcoming car tax changes, who will be affected, and what drivers need to know.

Electric Vehicles (EVs) No Longer Tax-Exempt

For years, EV owners have benefited from zero road tax, but that is about to change. From April 2025:

• New EVs registered on or after April 1, 2025 will pay a first-year VED rate of £10, followed by a standard rate of £195 per year from the second year onwards.
• Existing EVs registered between April 1, 2017, and March 31, 2025 will no longer be tax-free and will now also pay the standard rate of £195 per year.
• Expensive EVs (with a list price over £40,000) will incur an additional £425 per year for five years after the first year.

More details can be found on the UK government’s official site: gov.uk.

Higher Costs for Hybrid and Low-Emission Cars

Hybrid and low-emission vehicle owners will also see increases in their VED rates:

• Cars emitting 1-50g/km CO₂: The first-year tax will rise to £110 (up from £10).
• Cars emitting 51-75g/km CO₂: The first-year tax will rise to £130 (up from £30).
• From the second year onwards, all hybrid and low-emission cars will be taxed at the standard £195 per year.

Major Increases for High-Emission Vehicles

Owners of high-emission cars will be hit hardest by the upcoming tax changes. The first-year rate for vehicles emitting over 255g/km CO₂ will rise sharply:

• First-year VED will jump to £5,490, up from the current rate of £2,745.
• From the second year onwards, these vehicles will be taxed at the standard £195 per year, plus the £425 supplement for five years if they cost over £40,000.

A full list of tax bands for all vehicles is available on the UK government website: gov.uk.

The £40,000 “Luxury Car” Tax Expands to EVs

Currently, vehicles with a list price over £40,000 are subject to an additional VED charge of £425 per year for five years, in addition to the standard tax rate. While EVs have previously been exempt, from April 2025, this charge will also apply to electric cars.

Why Are These Changes Being Introduced?

The government has stated that these tax changes are aimed at creating a fairer system, ensuring that all vehicles contribute towards maintaining and improving UK roads. Since EV adoption is rising, removing their tax exemption is intended to generate revenue that was previously lost due to lower fuel duty collections.

Additionally, the tax increases on high-emission vehicles are part of the UK’s broader strategy to encourage the adoption of cleaner transportation and meet climate targets.

How Can Drivers Reduce Their Costs?

With these new rates coming into effect soon, drivers looking to minimize their costs can consider:

• Switching to a lower-emission vehicle: Vehicles with lower CO₂ emissions generally have lower first-year tax rates.
• Buying a car before April 2025: EVs and hybrids registered before the changes take effect may benefit from lower tax rates compared to those registered afterward.
• Checking the vehicle’s list price before purchase: Avoiding vehicles priced over £40,000 can help drivers dodge the additional £425 charge.

For more advice on how these tax changes could affect you, visit the DVLA website.

Final Thoughts

The April 2025 car tax changes represent one of the biggest overhauls of the UK’s vehicle taxation system in recent years. While some drivers will see only modest increases, those with high-emission cars or expensive EVs will face significant new costs.

To avoid unexpected charges, motorists should review their current vehicle’s tax obligations and consider the impact of these new rates before purchasing a new car.

Stay informed about all upcoming changes by visiting the official government sites linked above.

This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.