As April approaches, a significant change in the UK’s car tax, Vehicle Excise Duty (VED), is set to take effect, yet a staggering 75% of Brits are unaware of these impending tax hikes.
According to the Independent, the new regulations will see a sharp increase in VED rates for new petrol, diesel, and hybrid vehicles, with the aim of encouraging drivers to switch to electric vehicles (EVs).
The New Car Tax Rates
Starting April 1, 2025, the first-year VED rates for new petrol and diesel cars will double, says the Independent. For instance, cars emitting more than 255g/km of CO2 will see their first-year tax rise from £2,745 to a whopping £5,490. Even electric vehicles, which were previously exempt from VED, will now have to pay £10 in their first year and £195 annually thereafter.
Impact on Drivers
The Independent says the changes are expected to raise £400 million per annum for the Treasury. However, they also mean higher costs for drivers, especially those purchasing new, high-emission vehicles. The new rates are designed to widen the gap between the costs of owning petrol/diesel cars and EVs, incentivizing the latter.
This overhaul means first-year Vehicle Excise Duty (VED) for high-emission cars could more than double, with some models facing charges of up to £5,490 depending on their CO₂ output. Even hybrid vehicles, once seen as a stepping stone to cleaner motoring, will see their rates rise significantly — bringing them closer to traditional petrol and diesel bands.
The government’s goal is to widen the cost gap between polluting vehicles and zero-emission alternatives, making electric cars a more attractive option for buyers. With EVs now subject to standard VED from year two onward, the pressure to switch early is mounting, says AutoTrader.
Industry Reactions
The car industry has expressed concerns about the impact of these tax hikes. Kevin Griffin, the UK head of Korean car brand KGM, warned that the increased VED rates could negatively affect driver demand for new cars. He urged the government to support the car sector to avoid a decline in new vehicle sales.
Public Awareness
Despite the significant financial implications, a poll by WeBuyAnyCar revealed that up to 75% of drivers are unaware of the upcoming changes. This lack of awareness could lead to unexpected costs for many motorists who are not prepared for the higher taxes.
As the UK gears up for these changes, it is crucial for drivers to stay informed about the new VED rates and plan accordingly. While the tax hikes aim to promote the adoption of electric vehicles, they also highlight the need for better communication and support for both drivers and the car industry.
Whether you’re buying new, renewing your tax, or simply trying to stay compliant, now’s the time to get informed. Review your vehicle’s emissions, check your tax band, and consider whether switching to a low-emission or electric model could save you money in the long run. Staying ahead of these changes isn’t just smart — it could save you thousands. Don’t get caught out when the new rules roll in.
Are you considering switching to an electric vehicle, or do you have any concerns about how these changes might affect you?
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