Motorists in the UK will face significant car tax<\/strong> and Vehicle Excise Duty (VED)<\/strong> changes from April 1, 2025<\/strong>, with tax increases affecting electric, petrol, diesel, and hybrid vehicles<\/strong>.<\/p>\n\n\n\n
For years, electric vehicles<\/a><\/strong> have been free from VED charges, but from April 2025<\/strong>, this will change. Drivers of fully electric cars<\/strong> will need to pay a first-year tax rate of \u00a310<\/strong>, followed by an annual standard rate of \u00a3195<\/strong> from the second year onwards.<\/p>\n\n\n\n
While EVs<\/strong> remain cheaper to maintain due to fewer moving parts, the introduction of car tax<\/a><\/strong> payments raises questions about whether they will still be more cost-effective than petrol<\/strong> and diesel cars, especially for those who rely on public charging stations.<\/p>\n\n\n\n
The first-year VED<\/a><\/strong> for new petrol, diesel, and hybrid cars will see significant increases, with most rates doubling<\/strong>. The government aims to further incentivise the switch to electric vehicles while penalising higher-emission models.<\/p>\n\n\n\n
From the second year onwards, car tax (VED) for petrol and diesel cars will rise to \u00a3190 annually, while alternative fuel vehicles (such as hybrids) will pay \u00a3180. Vehicles exceeding \u00a340,000 in value will continue to be subject to the \u00a3410 annual Expensive Car Supplement for five years.<\/p>\n\n\n\n
For electric vehicles, the second-year tax will rise from \u00a310 to \u00a3195<\/strong>, aligning them with petrol and diesel cars.<\/p>\n\n\n\n
Chancellor Rachel Reeves<\/a><\/strong> emphasised that the government is committed to encouraging EV adoption by increasing the tax gap between electric and internal combustion engine vehicles. However, concerns remain over whether rising ownership costs will deter new buyers from switching to EVs.<\/p>\n\n\n\n
The financial impact of these changes is expected to be substantial, with HM Revenue & Customs<\/a><\/strong> predicting an additional \u00a3415 million in revenue for 2025\/26 due to the VED increases. However, as more motorists transition to EVs, tax revenue is projected to decline from 2027 onwards.<\/p>\n\n\n\n