Motorists could end up paying £600 in tax from next year amid changes to Vehicle Excise Duty. The DVLA has begun sending out letters warning of the changes to drivers
Motorists are being warned about upcoming tax changes that could see them pay £600 extra a year.
The Government will issue new car tax changes and vehicle excise duty (VED) rates in April next year. Over 1 million drivers across the UK will see a “fairer” change to VED as electric car (EV) owners will be required to start paying it.
The Government website said: “From April 1, 2025, drivers of electric and low emission cars, vans and motorcycles will need to pay vehicle tax in the same way as drivers of petrol and diesel vehicles. This change will apply to both new and existing vehicles.
“This new measure effectively removes band A under the existing VED system which is currently £0. Vehicles in this band will be required to move to the first band where a rate becomes payable.”
For electric and low emission cars registered on or after April 1 next year, the Government said: “You will need to pay the lowest first year rate of vehicle tax (which applies to vehicles with CO2 emissions 1 to 50g/km). From the second tax payment onwards, these vehicles will pay the standard rate. This is £190 for 2024 but is subject to change for 2025.”
The DVLA, which has said vehicle tax decisions are made by the Treasury, has begun contacting electric car owners. The letter, Birmingham Live reports, says: “When the time comes to tax your electric vehicle, your vehicle tax will be calculated automatically, and you’ll receive a reminder.”
The tax means owners of premium electric models could face the luxury vehicle tax starting in 2025. Car owners with vehicles valued over £40,000 are subjected to a £410 charge for five years after the model is first registered, taking their annual sum to £600 as the standard VED charge is £190. This could also rise following a review next year.
HM Revenue and Customs (HMRC) previously stated its intention to “continue to use the tax system to support the transition” to electric vehicles (EVs). HMRC insists the new changes are about fairness and making sure EV drivers “pay a fairer tax contribution” for road usage.
The statement added: “This measure will impact on individuals who own an electric car, van or motorcycle. These individuals will now need to pay VED on their vehicles. Changes will come into effect from 1 April 2025. For existing vehicles, changes to VED rates will apply from the vehicle’s annual renewal date for the 2025-26 financial year.”
