Car Tax Changes to Impact Vehicles from April 2025
In a bid to address the environmental impact of vehicles on the road, changes to the Vehicle Excise Duty (VED) system are set to come into effect in April 2025. These changes will see higher tax rates for many motorists, particularly affecting electric, zero, and low-emission vehicles. Previously exempt from charges, these environmentally friendly vehicles will now be subject to new tax rates.
The modified system will eliminate band A under the current VED system, which currently amounts to £0. Vehicles falling under this band will be required to transition to the first band where a tax rate is applicable. The adjustments will apply to both new and existing vehicles, with the amount payable determined by the vehicle type and registration date. A comprehensive breakdown of the changes can be accessed on the government website, GOV.UK.
For electric, zero, or low-emission cars registered on or after April 1, 2025, drivers will be required to pay a nominal first-year rate of vehicle tax set at £10. Subsequently, from the second tax payment onwards, the standard rate of £195 will apply. Vehicles registered between April 1, 2017, and March 31, 2025, will follow the standard rate of £195. Similarly, cars registered between March 1, 2001, and March 31, 2017, will move to the first band with a VED value of £20.
Hybrid and alternatively fuelled vehicles (AFVs) are also affected, with the £10 annual discount for these vehicles being removed. The tax rate for these vehicles will be dependent on the registration date, varying between vehicles registered before April 1, 2017, based on CO2 emissions and those registered on or after April 1, 2017, charged the standard rate of £195.
Electric vans will transition to the standard annual rate for light goods vehicles, and electric motorcycles and tricycles will be shifted to the annual rate applicable to the smallest engine size. Moreover, for new electric and zero-emission vehicles registered on or after April 1, 2025, with a list price exceeding £40,000, an additional expensive car supplement will be levied on top of the standard rate for the initial 5 years from the start of the second license.
These updates signify the government’s commitment to promoting environmentally friendly vehicles and reducing carbon emissions from transportation. The changes aim to encourage the adoption of greener transport options while ensuring that drivers contribute their fair share towards environmental conservation efforts.
While the adjustments may result in higher costs for some motorists, the long-term benefits of reduced emissions and a healthier environment are invaluable. As the automotive industry continues to evolve towards sustainability, these changes reflect a step in the right direction towards a greener future for transportation. Motorists are advised to stay informed about the upcoming modifications and plan their vehicle-related expenses accordingly to comply with the revised VED system effectively.