UK drivers are set to be hit with a massive overhaul of car tax prices from April 1, 2025. The new changes, released as part of the government’s plan to incentivize the transition to lower-emission cars, will affect owners of petrol, diesel, high-end, and even electric vehicles with increased first-year and annual taxes.
Whether you’re driving a family SUV, a luxury saloon, or a recently bought EV, here’s what you need to know about how these Vehicle Excise Duty (VED) hikes might hit your purse.
Contents
What’s Changing?
| Vehicle Type | Current Tax (2024) | From April 2025 | Increase |
|---|---|---|---|
| High-emission vehicles (>255g/km CO₂) | £2,745 (first year) | £5,490 (first year) | +£2,745 |
| EVs (Registered 2017–2025) | £0 | £195/year (standard VED) | +£195/year |
| Cars over £40,000 | £390/year (ECS) | £425/year (ECS) | +£35/year |
| Diesel (avg increase) | Varies | Up to £1,114 | Significant |
| Petrol/Hybrids | Varies | Increase of £135–£327 | Moderate |
Why Is the Government Increasing Car Taxes?
The primary objective is to reduce carbon emissions and nudge motorists towards cleaner, greener vehicles. EVs have long had tax incentives, but those are being rolled back as their use becomes more widespread.
The transition will also raise revenue to pay for infrastructure and green initiatives.
Who Will Be Affected?
High-Emission Vehicles
If your car emits more than 255g/km of CO₂, you’ll face a doubling of the first-year tax — from £2,745 to a staggering £5,490. This mostly affects large petrol or diesel vehicles, including some performance and SUV models.
Expensive Cars Over £40K
The Costly Car Add-on (ECS) will increase to £425 annually, covering cars with a list price over £40,000, regardless of whether you paid less due to a discount. This covers many premium vehicles, even some mid-range EVs.
Electric Vehicles (EVs)
EVs sold out between April 1, 2017, and March 31, 2025, will have their tax-free advantage stripped away and will become liable for an annual fee of £195. While still lower than for high-emission cars, this is the conclusion of the EV free ride.
How to Prepare
- Buy Ahead of Time: Preparation is key. If you’re car-hunting, buying ahead of time by April 1, 2025, can benefit you hundreds or thousands of dollars in the long term.
- Choose Models Under £40K: To avoid the ECS, choose cars under £40,000.
- Go Greener: Lower-emission cars (especially plug-in hybrids and stingy EVs) will pay significantly less VED than their polluting equivalents.
- Check for Exemptions: Blue Badge holders and certain mobility scheme users may still qualify for VED relief.
This tax overhaul is one of the biggest UK drivers have seen in years. Whether you’re buying new, already own a car, or are planning ahead, it’s worth being aware of these changes to avoid unexpected costs.
Being in the know and making informed choices could save you thousands over the life of your vehicle.
