Changes to the UK’s vehicle tax system set to take effect from 1 April 2025 will introduce new taxation rules for some vehicle owners. These adjustments, reported by Manchester Evening News, primarily impact electric and low-emission vehicles, which were previously exempt from road tax.
The changes will also affect petrol, diesel, and alternative fuel vehicles, with tax rates varying based on CO2 emissions, vehicle type, and market value.
Electric and Low-Emission Vehicle Owners to Face New Tax Obligations
From April 2025, owners of electric and low-emission vehicles will be required to pay vehicle excise duty (VED) for the first time. Newly registered electric cars will incur an initial tax charge of £10 in their first year.
Vehicles purchased between 1 April 2017 and 31 March 2025 will be subject to an annual tax of £195.
Additionally, electric vehicles with a list price of £40,000 or more will be subject to the Expensive Car Supplement. This supplement introduces an additional charge of £410 per year for five years, starting in the second year of ownership.
Consequently, the total tax for these vehicles will be £620 per year from year two to year six. From year seven onwards, the tax will reduce to £195 annually.
Petrol and Diesel Vehicle Tax: Rates Based on Emissions
Petrol and diesel vehicle owners will continue to pay road tax based on CO2 emissions recorded at the time of registration. Higher emission vehicles will face higher tax rates.
Diesel cars that do not comply with the Real Driving Emissions 2 (RDE2) standard for nitrogen oxide (NOx) emissions may be subject to additional charges.
The second-year tax rate and subsequent charges may vary depending on vehicle type and government updates to tax structures.
Alternative Fuel Vehicles: New Tax Considerations
Vehicles using bioethanol, liquid petroleum gas (LPG), or hybrid technology will also see adjustments in taxation.
Like petrol and diesel vehicles, their first-year tax rates will be determined based on CO2 emissions at the time of registration.
The tax applied in subsequent years may differ depending on the vehicle’s classification and fuel type.
Annual Tax Rates for Electric Vehicles From April 2025
For electric vehicles priced under £40,000, the first-year tax will be £10, followed by an annual tax of £195 from the second year onwards. This rate will remain in place through year seven and beyond.
For electric vehicles priced over £40,000, the first-year tax will also be £10. However, from the second to the sixth year, owners will be required to pay £620 per year, which includes the £410 Expensive Car Supplement. From the seventh year onwards, the annual tax will reduce to £195.
