From April 2025, owners of petrol and diesel cars first registered between 1984 and 2001 will face higher Vehicle Excise Duty (VED) fees. These annual increases, aligned with inflation as measured by the Retail Price Index (RPI), will predominantly affect older vehicles.
Targeted Increases for Older Cars
Unlike modern vehicles, where VED is calculated based on emissions, older cars are taxed according to engine size. However, vehicles registered before 1984 will remain exempt under the historic vehicle tax exemption rules.
From spring 2025, cars with an engine capacity of 1549cc or less will see their annual VED rise from £210 to £220, an increase of £10. Meanwhile, vehicles with engines exceeding 1549cc will see a larger increase, with rates rising from £345 to £360, representing a £15 hike.
While this year’s increase may appear moderate compared to the £20 rise for larger engines in 2024, it adds further financial strain for owners of older cars.
Widespread Tax Rises for All Drivers
The changes will not be limited to older vehicles. Owners of more recent cars will also feel the impact. First-year VED rates for high-emission vehicles are set to rise sharply, with some drivers facing costs of nearly £5,500 per year.
Electric vehicle (EV) owners, who currently benefit from VED exemptions, will also be affected. Starting from April 2025, zero-emission vehicles will be subject to VED charges for the first time.
HMRC’s Rationale for the Changes
HM Revenue and Customs (HMRC) has confirmed these adjustments will follow inflation and are not intended to raise additional revenue. Nevertheless, the financial impact on motorists will be significant.
An HMRC spokesperson stated: “This measure will uprate Vehicle Excise Duty rates for cars, vans, motorcycles, and motorcycle trade licences in line with the Retail Price Index. It also reflects the inclusion of zero-emission vehicles in the Vehicle Excise Duty system from 1 April 2025.”
Financial Implications for Motorists
Despite assurances from the authorities that the changes are purely inflationary, many motorists—especially those with older or more polluting vehicles—are likely to feel the strain on their budgets. The increases may prompt some owners to consider replacing their vehicles with newer, more environmentally friendly models, though the upfront costs of such a switch remain a barrier for many.
For electric vehicle owners, the end of tax exemptions marks a pivotal moment that could influence the adoption of zero-emission transport.
Motorists are encouraged to take these changes into account when planning their future vehicle choices.
Just another excuse to hit drivers with another price hike , anything just to get more money . Petrol is nearly £6 a gallon. Diesel about £7 no wonder people are giving up their car .