In April 2025, owners of older petrol and diesel vehicles registered between 1984 and 2001 will face a significant tax increase in Vehicle Excise Duty (VED) fees. Unlike newer vehicles which are taxed based on emissions levels, these older cars are taxed according to their engine size. Vehicles registered before 1984 are exempt from charges due to historic vehicle tax exemption rules. The impending tax hike, set to take effect in the coming months, will impact many petrol and diesel vehicle owners as rates are scheduled to rise across the board.
Motoring experts at Pete Barden have indicated that older cars with engine capacities of 1549cc and below can expect a £10 increase in annual rates, rising from the current £210 to £220 per annum as of April 2025. Vehicles with engine sizes above 1549cc will see a rate increase to £360, up from the current £345. Despite the £15 increase, it is noted to be lesser than the previous year’s £20 rise. It is important to highlight that the announcement from HM Revenue and Customs reveals a general increase in VED rates from 2025, affecting not only owners of older cars but a majority of vehicle owners who will experience some form of cost increment.
The new VED rates come in line with inflation and indicate a shift in targeting high-emission petrol and diesel vehicles to combat pollution. Coinciding with the new measures, electric vehicle (EV) owners will begin paying VED from April 2025 as zero-emission vehicle exemptions cease. HMRC has clarified that the adjusted VED rates, excluding first-year rates, will be uprated by the Retail Price Index starting from April 1, 2025. While HMRC states that the annual uplift is not intended as an income boost, the impact on drivers’ finances remains inevitable.
The changes in VED fees are part of a broader effort to align taxes with environmental objectives and encourage a shift towards cleaner transportation options. With the increasing focus on reducing carbon emissions and promoting sustainable practices, the adjustments in VED rates aim to incentivise the adoption of greener vehicles. As the automotive industry continues to evolve towards a more environmentally conscious future, these policy changes reflect a strategic approach to address the challenges of climate change and air quality.
The implications of the tax hike on petrol and diesel vehicles also underscore the wider transition towards electric and zero-emission vehicles. As governments and regulatory bodies around the world intensify their efforts to curb greenhouse gas emissions, taxation policies play a crucial role in shaping consumer behaviour and influencing market dynamics. By adjusting VED rates in line with environmental objectives, policymakers seek to accelerate the shift towards cleaner and more sustainable modes of transportation.
The shift in VED rates for older petrol and diesel vehicles raises important questions about the future of traditional combustion engine cars and the need for increased investment in alternative fuel technologies. While the tax hike may pose challenges for some motorists in the short term, it also signals a broader shift towards greener transport solutions and a transition away from fossil fuel dependence. The changing landscape of vehicle taxation reflects a larger trend towards environmental sustainability and demonstrates the ongoing evolution of the automotive industry towards a more eco-friendly future.