UK Drivers Face Huge Car Tax Hikes from April — See How Much You’ll Pay Under New VED Rules

From April 1, 2025, UK drivers will experience major changes in Vehicle Excise Duty (VED)—commonly known as car tax. The HM Revenue & Customs (HMRC) has confirmed that petrol and diesel vehicle owners will face significantly higher costs, with some high-emission car owners paying up to £5,490 in their first year alone.

Even electric vehicle (EV) owners will no longer be exempt from VED, marking a significant shift in the UK’s taxation policy. The new rules are aimed at reducing carbon emissions and ensuring a fairer tax system as more drivers transition to electric cars.

If you own a petrol, diesel, hybrid, or electric vehicle, here’s what you need to know about these upcoming tax changes and how they could affect your finances.

Key Changes to Car Tax from April 2025

The new VED rules affect both new and existing vehicle owners, and the changes will be based on emissions and vehicle type.

1. First-Year VED Increase for High-Emission Vehicles

• Vehicles emitting over 255g/km of CO₂ will face a huge increase in their first-year tax.
• The rate will double from £2,745 to £5,490, making it significantly more expensive to own a high-emission vehicle.

📌 Example: If you buy a large petrol SUV emitting 260g/km CO₂, your first-year tax alone will be £5,490.

2. Standard VED Rate for Existing Vehicles

• From the second year onwards, all vehicles registered between April 1, 2017, and March 31, 2025, will pay a standard rate of £195 per year, regardless of fuel type.
• This aligns petrol, diesel, hybrid, and electric vehicles under the same tax rate for the first time.

What This Means: If you own a petrol or diesel car purchased in 2020, you’ll now pay £195 per year in car tax.

3. Electric Vehicles (EVs) Will No Longer Be Exempt from VED

• EV owners have never paid car tax before—but from April 2025, all newly registered electric cars will pay a first-year tax of £10.
• From year two onwards, EV owners will be required to pay the £195 standard rate, just like petrol and diesel cars.

Why Is This Happening? The UK government is removing tax incentives for EVs as their adoption increases, making them part of the standard VED system.

For more information, see GOV.UK’s Electric Vehicle Tax Update.

4. Expensive Car Supplement Extended to Electric Vehicles

• Cars with a list price over £40,000 will have to pay an extra £425 per year for five years after the first registration.
• Previously, this applied only to petrol and diesel vehicles, but now electric vehicles will also be included.

Example: If you buy a £50,000 electric car in April 2025, you will pay £195 + £425 = £620 per year from the second to sixth year of ownership.

How Will These Changes Affect UK Drivers?

Petrol & Diesel Car Owners

• If you drive a high-emission car, expect a big increase in first-year tax, especially for SUVs and performance vehicles.
• Even for older petrol and diesel cars, the new standard rate of £195 per year applies.

Electric Vehicle Owners

• The days of tax-free electric cars are over—from 2025, EVs will pay VED like all other vehicles.
• High-end EVs will be hit hardest, as they now fall under the “expensive car” supplement.

Budgeting for Car Owners

• If you’re buying a new car, factor in the higher first-year tax for petrol and diesel models.
• For existing vehicle owners, expect an increase in annual tax payments.

Why Is the Government Changing Car Tax?

The government states that the new tax system is aimed at making VED fairer and ensuring that all vehicles contribute towards road maintenance and public transport funding.

Key reasons include:

• Encouraging people to choose lower-emission vehicles
• Reducing incentives for high-emission cars
• Ensuring EV owners contribute to road tax as they become mainstream

How to Check and Pay Your Vehicle Tax

Online: Visit GOV.UK’s VED Payment Portal
By Phone: Call 0300 123 4321 (DVLA Vehicle Tax Helpline)
By Post: Send payments to DVLA, Swansea, SA99 1ZZ

Final Thoughts: What Should Drivers Do?

With VED rates increasing across the board, UK drivers need to be aware of how these changes will impact their car tax bills from April 2025.

Key Takeaways:

• High-emission cars will be taxed more heavily in the first year
• Electric vehicles will no longer be tax-exempt
• All cars registered after April 2017 will pay £195 per year
• Luxury vehicles (over £40,000) will be hit with extra charges

What do you think of these tax changes? Share your thoughts below!

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.