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The UK car tax changes April 2025 are being dubbed the biggest shake-up of vehicle excise duty (VED) in almost a decade. Whether you drive a petrol hatchback, a diesel SUV, or have proudly joined the electric vehicle (EV) club, these new rules are likely to affect how much you’ll pay road tax.
With fresh tax bands, rising first-year costs, and the end of free road tax for EVs, it’s time to understand what’s changing, how it impacts your vehicle, and what steps you need to take. Having a taxation expert, such as MMBA Accountants experts can help you deal with the changes easily.
Table of Contents
What is VED and Car Tax Basics
Before diving into the 2025 changes, let’s cover the basics.
Car tax, also known as road tax, vehicle tax, or officially vehicle excise duty (VED), is the amount you pay to keep your car legally on UK roads. The amount you pay depends on:
When the car was first registered
- Fuel type (petrol, diesel, electric, hybrid)
- CO2 emissions
- Engine size
- List price (especially for luxury models)
From 1 April 2025, many of these factors will be taxed differently, and for many drivers, the amount they need to pay depends on details they might not have thought about in years.
New Car Tax Rates in April 2025
One of the headline changes to vehicle tax from April 2025 is the doubling of first-year VED rates for most vehicles. For buying new cars, the first year tax bill is now heavily influenced by CO2 emissions, and the difference can be significant.
Here’s how some car tax bands have shifted:
Cars emitting 1–50 g/km CO2 (plug-in hybrids): up from £0 to £110
Cars emitting 51–75 g/km CO2: increased from £30 to £130
Cars emitting 76–90 g/km CO2: now £270, up from £135
Top band (255+ g/km): now £5,490, a whopping increase from £2,745
So, for example: A new VW Golf 1.5 TSI now has a first-year VED of £440 (up £220). Also, a BMW X5 M60i will face £5,490 upfront in tax. These new road tax bands hit the wallet hard, especially for those buying luxury petrol and diesel cars or high-emission diesel models.
Changes for Petrol, Diesel and Hybrid Cars
If you’re buying a petrol or diesel car registered from 1 April 2025, you’ll pay more in the first year and then a standard rate of £195 annually.
- The standard rate for petrol and diesel cars after year one is now £195, up from £190
- Hybrid cars get no special break anymore unless emissions fall into lower bands
- Cars registered between 1 March 2001 and 31 March 2017 still fall under the old CO2-based system, but all bands have been nudged up by £5–£25
Car Tax Bands Example (Cars registered 2001–2017)
The car tax bands examples are:
Band B (101–110g/km): still £20
Band C (111–120g/km): now £35
Band M (255+ g/km): now £760, up from £735
Pre-2001 Vehicles
Cars registered before March 2001 are taxed based on engine size, not emissions:
- Engines under 1549cc: £220 annually
- Engines over 1549cc: £360 annually
In case, if you’re still running a vintage car, the new rates probably don’t impact you much.
Electric Car Tax Changes 2025
Let’s talk electric vehicles (EVs). For years, EV owners enjoyed free road tax as part of the government’s green push. But those days are over. Starting from 1 April 2025, electric cars and electric vans face the same tax rules as other motorists.
Also, read about Benefit in Kind Tax guide to get more clarity.
EV Tax Rules from April 2025
The EV tax rules from April 2025 are:
- EVs registered between 1 April 2017 and 31 March 2025: now pay £195 annually
- New EVs registered from 1 April 2025: pay £10 in first year, then £195 annually
- EVs with a list price over £40,000: hit with the £425 “expensive car supplement” for 5 years
This means a new £45,000 electric SUV will cost you £435/year from year two onward.
Reason of the Change
The government says this aligns with the principle that “all motorists should contribute to maintaining UK roads.” As electric vehicles (EVs) become more common, the Treasury is shifting away from exemptions. But it’s still controversial. Many EV owners see it as a step backward for green transport.
However, if you are a salaried person, you must understand about the implications of tax changes on salary, to stay away from penalties.
Expensive Car Supplement and Luxury Car Tax
Any car, such as EV, petrol or diesel, with a list price over £40,000 will face an additional charge from the second year onward.
Known as the luxury car tax or expensive car supplement, it costs £425 per year for 5 years, and it applies to:
- Premium SUVs
- High-spec electric vehicles
- Executive petrol/diesel cars
You could be buying an eco-friendly EV but still end up paying over £600/year in tax if it’s a luxury model.
When to Registered When and Why It Matters
Cars registered between 1 March and 31 March fall into different rules than those registered between 1 April 2025 onwards. A few days can make a big difference.
Cars registered before 1 April 2025: May still benefit from older tax structures
Cars registered on or after 1 April 2025: Subject to new rules, including EV taxes
Tip: When buying a new car in March 2025, you might want to push the registration date forward or backward depending on what suits your tax situation best.
How to Tax Your Car
The process of taxing a car remains unchanged. You can tax your vehicle:
- Online via the government website
- At the Post Office
- By phone
You’ll need:
- Your V5C logbook
- A tax reminder or new keeper slip
- A payment method (debit card, credit card, or direct debit)
- If your car is exempt (e.g., classic cars, disabled drivers), you still need to register it as taxed.
And don’t forget; driving an untaxed vehicle can lead to fines and penalties. Having a personal taxation adviser can also help a great deal to understand these changes and get through them easily.
How to Check If Your Car Is Taxed
Visit the government website and use the registration number (your number plate) to check if your vehicle is taxed. Moreover, see when your road tax expires. Also, confirm if your car is SORN (statutory off-road notification)
Important: This step helps you avoid accidentally driving an untaxed vehicle.
What Does This Mean for UK Drivers?
In basic terms, UK drivers now face higher costs especially for new vehicles. Even electric car tax changes mean EVs are no longer a free ride.
If you’re shopping for a new car in 2025, consider:
- CO2 emissions
- Engine size
- Fuel type
- Retail price
- Date of first registration
Each of these will affect how much vehicle excise duty VED you pay.
It’s also worth watching the Autumn Budget later this year. Some experts say further tweaks to car tax rates and road tax are likely if the Labour government proceeds with climate policies or budget reshuffles.
Considerations and Criticisms
While the reforms encourage the transition to cleaner vehicles, they have faced criticism for potentially burdening consumers. Especially those who purchase EVs that now fall under the “luxury car tax” due to unchanged thresholds since 2017 have to cautious. Industry experts, such as Rachel Reeves and consumer groups, have called for a reevaluation of these thresholds to reflect current market prices and to avoid disincentivizing EV adoption.
Chancellor Reeves has acknowledged these concerns and indicated that the government is considering adjustments to the expensive car supplement threshold to better align with today’s EV market .
For more detailed information on the VED changes and how they may affect you, visit the official government website.
Conclusion
The most important thing is that you need to review your current car’s tax band. Another aspect is to check your tax renewal date. Afterwards, compare first-year costs if buying new and then factor in luxury car tax if the list price exceeds £40,000. Use the government website to tax your car also helps to stay compliant.
The UK car tax changes April 2025 affect almost every type of vehicle on the road; from diesel cars registered in 2008 to new electric cars rolling off the line this spring. There’s no escaping vehicle tax. However, being informed means that you can plan, budget, and avoid fines. As we head into a new tax year, make sure that your vehicles are road-ready.
Remember: What you pay depends on what you drive, when it was registered, and how much carbon dioxide it pumps into the air. Choose wisely. Drive smart. And don’t let your next tax bill catch you off guard.
FAQs
What’s meant by a “second licence” in car tax terms?
A second licence refers to the annual tax payment after the first year of registration. From the second licence year onwards, EVs and high-value cars will face new charges.
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