RAC warns of significant increases including electric models

Significant alterations to car tax are set to take place this April, affecting all drivers. Regardless of whether they own previously untaxed electric vehicles or petrol and diesel cars, everyone is expected to face substantial increases.

The situation is complex, prompting the RAC to issue a warning to motorists, explaining how these changes will affect them. Major modifications in Vehicle Excise Duty (VED) rates were announced in the Autumn Budget by Labour.

Starting from April 2025, the Government has decided to considerably increase first-year VED charges for petrol and diesel models. These are hefty fees that new vehicle owners must pay before transitioning to the standard rate.

Additionally, EV owners will also be subjected to payments for the first time. Here’s a breakdown of all the changes as outlined by the RAC: Electric vehicles: From April 1, 2025, electric vehicles will undergo changes.

Electric vehicles

For the first time, electric vehicle drivers will be required to pay VED, marking a significant rise in ownership costs. Moreover, a new Expensive Car Supplement will result in buyers of electric vehicles costing over £40,000 paying up to £620 annually in tax, reports Lancs Live.

For electric, zero or low emissions vehicles registered on or after April 1, 2025, drivers will have to pay the lowest first-rate of tax – £10 – but from the second tax payment onwards, this will increase to the standard rate of £195 per year.

Electric vehicles with zero or low emissions registered between April 1, 2017 and March 31, 2025, will now be subject to the standard rate of £195. However, EVs registered between March 1, 2001 and March 31, 2017, will move to the first band that has a VED value, resulting in a tax payment of £20.

Until now, electric vehicles have been exempt from the Expensive Car Supplement, but this changes from April 1, with cars registered on or after this date now liable for the additional cost. This means drivers of EVs costing over £40,000 will have to pay a standard rate along with an additional supplement for the first five years from the start of the second payment.

Consequently, many owners of an EV over £40,000 will pay £620 per year in road tax.

Petrol and Diesel

Cars registered before March 1, 2001 are categorised as Private/Light Goods (PLG) vehicles, or private motor cars or good vehicles not exceeding 3,500kg revenue weight.

The system for cars is divided into two categories based on engine size – not over 1549cc and over 1549cc.

PLG Tax Class 11	12 months	Six months
Not over 1549cc	£210	£115.50
Over 1549cc	£345	£189.75

In both cases, payment can also be made via Direct Debit, but this will result in a higher overall cost.

For instance, the total payable for 12 months road tax for a car over 1549cc by 12 monthly Direct Debit instalments is £341.25. Tax bands for cars registered after March 2001 and before April 2017.

Tax bands for cars registered after April 2017

VED road tax rates for cars first registered post-March 2001 and pre-April 2017 are divided into 13 bands based on the vehicle’s CO2 emissions. Simply put, the lower the CO2 emissions, the lower the tax band.

Opt for a car with CO2 emissions under 100g/km and you’ll be exempt from road tax; however, this is set to change in 2025 when Band A cars will shift into Band B. Road tax for petrol and diesel cars registered after March 2001 and before April 2017 are generally similar.

VED for alternative-fuel vehicles – such as hybrids, plug-in hybrids, and those powered by LPG, CNG or biofuel – is £10 less than standard petrol or diesel cars.

VED band	CO2 emissions	Annual rate
A	Up to 100g/km	£0
B	101-110g/km	£20
C	111-120g/km	£35
D	121-130g/km	£160
E	131-140g/km	£190
F	141-150g/km	£210
G	151-165g/km	£255
H	166-175g/km	£305
I	176-185g/km	£335
J	186-200g/km	£385
K	201-225g/km	£415
L	226-255g/km	£710
M	Over 255g/km	£735

Tax bands for cars registered after April 2017

On 1 April 2017, the UK’s system for taxing new cars was altered. The CO2-based VED system was replaced with three new road tax bands – zero, standard and premium. These changes only impact cars first registered after April 2017 and were implemented in response to decreasing CO2 emissions levels, which resulted in many UK motorists paying little or no VED.

This led to significant loss of revenue for the Treasury, prompting the Government to make crucial adjustments to how road tax is calculated.

Cars first registered after April 2017 are still subject to the first-year ‘showroom tax’, with the initial rate based on the vehicle’s CO2 emissions. From the second year onwards, a standard rate of £190 per year is applied.

Only zero-emission vehicles qualify for free VED, while new cars with a list price exceeding £40,000 pay an additional £410 for the first five years the standard rate is applied. The road tax system will undergo another change in 2025 when electric cars will be charged VED for the first time.

New electric cars will be subject to the standard rate of VED and the £40,000 premium car tax fee. EVs will also be subject to the first-year showroom tax (which applies to vehicles with CO2 emissions between 1 to 50g/km), currently set at £10 a year.

CO2 emissions (g/km)	First year rate	Standard rate*
0g/km	£0	£0
1 – 50	£10	£190
51 – 75	£30	£190
76 – 90	£135	£190
91 – 100	£175	£190
101 – 110	£195	£190
111 – 130	£220	£190
131 – 150	£270	£190
151 – 170	£680	£190
171 – 190	£1095	£190
191 – 225	£1650	£190
226 – 255	£2340	£190
Over 255	£2745	£190

A total of 59 cars from 24 brands, including popular manufacturers such as Ford, BMW, and Mercedes, are expected to face a £2,745 car tax increase in April 2025. Labour has decided to significantly increase first-year VED fees for petrol and diesel models from April 2025.

These substantial fees are paid by owners of brand-new vehicles before they switch to the standard rate. Fees will rise on a sliding scale, with most of the higher tiers seeing fees double from their current 2024 rates.

Models producing over 255 g/km of CO2 are set for the highest £2,745 increase, affecting some of the most popular vehicles on the road.

Currently, electric vehicles (EVs) benefit from not having to pay any Vehicle Excise Duty (VED) charges. This is in sharp contrast to traditional cars with emissions between 111g and 150g/km, which are subject to a £220 fee.

Cars emitting over 255g/km face an even heftier first-year charge of £2,745. However, starting from April, those purchasing electric vehicles will have to shell out a nominal £10 for their first year’s VED—a rate that has recently been frozen.

New models emitting more than 255 g/km.