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Car Tax Changes: What You Need to Know
As of April 1st, 2025, the UK's car tax system has undergone significant changes, impacting over a million drivers. Former Chancellor Jeremy Hunt's 2022 Autumn Statement aimed to create a "fairer" system, leading to the end of electric vehicle (EV) tax exemption and adjustments to rates for other vehicles.
Electric Vehicles No Longer Exempt
The biggest shift is the introduction of Vehicle Excise Duty (VED) for EVs, previously exempt. New EVs registered from April 1st, 2025, pay a minimal £10 first-year rate, escalating to the standard £195 annually thereafter. Existing EVs face immediate taxation at the £195 standard rate. This impacts the estimated 1.4 million EVs currently in the UK, with one in four new registrations being electric.
Changes for Other Vehicles
Other vehicle types also see changes. Zero-emission vehicles registered between 2001 and 2017 move to a £20 VED band, while electric vans face an annual rate of £335. Zero-emission motorcycles will pay £25. Furthermore, the £10 annual discount for hybrids and alternatively fuelled vehicles (AFVs) has been removed. The standard rate for vehicles registered after April 1st, 2017, remains at £195.
Higher Rates for High-Emission Cars
The changes extend to petrol and diesel vehicles, with significant increases in the first-year VED rate for high-emission models. 59 car models, emitting over 255g/km of CO2, face a dramatic tax hike—from £2,745 to £5,490 annually. This has prompted concern and criticism from some, like Northumberland County Council leader Glen Sanderson, who views it as detrimental to green initiatives.
Tips for New Car Buyers
Motorfinity's Josh Halt offers advice to navigate the new tax landscape: reassess affordability post-April 1st, explore various brands for better deals, and investigate any industry-specific discounts. Remember, VED contributes to road maintenance, but it's distinct from annual road tax.
Conclusion
The car tax shake-up is substantial and requires careful consideration. Drivers should check their vehicle's VED liability and explore available resources and advice to manage the new costs effectively. Remember to be wary of potential scams related to tax payments.
