Starting April 1, 2025, UK drivers will see changes to Vehicle Excise Duty (VED), with new tax rates that may cost motorists thousands of pounds
In just two weeks, electric vehicle owners who have long enjoyed being exempt from VED will be hit by new charges. The introduction of new car tax fees will see motorists pay up to £2,125 over five years.
From next April, all new EVs registered on or after this date will be required to pay a first-year tax rate of £10 before moving onto the standard rate of £195 per year from the second year onward. The changes, introduced as part of the government’s broader environmental and financial policies, will directly affect both new and existing vehicle owners. This marks a significant policy shift, removing one of the key financial incentives that previously encouraged drivers to transition to electric cars, BirminghamLive reports. Additionally, changes are also coming for those who already own electric vehicles.
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From April 2025, cars registered between April 1, 2017, and March 31, 2025, will be required to pay the standard annual rate of £195. Meanwhile, older EVs registered between March 1, 2001, and March 31, 2017, will now face a VED yearly charge of £20. Another major change will be the expansion of the Expensive Car Supplement, which is a tax applied to vehicles with a list price exceeding £40,000. Previously, electric cars were exempt from this surcharge, but that will no longer be the case.
From April 2025, newly registered electric vehicles that surpass the £40,000 threshold will be subject to an additional £425 per year for five years, beginning in the second year of ownership. This means that an electric vehicle priced over £40,000 will cost an extra £2,125 over five years, adding yet another financial burden to drivers who previously benefited from tax exemptions.
These tax hikes and policy changes significantly shift how vehicles are taxed in the UK. While the government insists that these measures are designed to make the system fairer and encourage a shift toward greener transport, critics argue that removing key incentives for electric and hybrid vehicles could slow the adoption of environmentally friendly cars.
With these changes on the horizon, industry experts recommend that motorists carefully consider their options when buying a new vehicle. Those planning to purchase an electric vehicle should evaluate whether the new VED charges will impact their long-term running costs.
For many, these changes represent a significant shift in vehicle taxation policy. With the cost of motoring already rising due to factors such as fuel prices and insurance premiums, introducing additional tax burdens will be an unwelcome development. As the government continues to pursue its environmental agenda while also seeking to balance public finances, these tax changes will unlikely be the last adjustments motorists will see in the coming years.
