New UK Car Tax Rules in 2025 Are Here – The new UK car tax rules for 2025 are officially in effect from April 1, 2025, and for many drivers, they bring significant changes — especially for owners of electric vehicles (EVs) and high-emission petrol or diesel cars. For the first time, EVs are no longer fully exempt from Vehicle Excise Duty (VED), and the tax structure has been revised to encourage greener choices while ensuring broader contribution to the country’s road infrastructure.
Whether you drive a petrol hatchback, a Tesla Model Y, or a hybrid SUV, the updated Vehicle Excise Duty (VED) bands will likely impact how much you pay annually — and in some cases, these charges could add hundreds of pounds to your yearly motoring costs.
Let’s break it all down so you know what to expect and how to avoid surprises.
New UK Car Tax Rules in 2025 Are Here
| Category | 2025 Update | Who’s Affected |
|---|---|---|
| EV Tax | First-year rate of £10; annual £195 thereafter | All electric vehicle owners |
| EVs over £40,000 | £425 annual “expensive car supplement” for 5 years | Premium EV buyers |
| High-emission vehicles | First-year rates now as high as £5,490 | New petrol/diesel car buyers |
| Hybrids & Alt-Fuel Cars | £10 discount scrapped | All hybrid owners |
| Older EVs (pre-2017) | £20 flat annual tax | Early adopters of EVs |
| Tax Checker Tool | gov.uk/check-vehicle-tax | All UK drivers |
The 2025 UK car tax rules reshape how EVs and high-emission vehicles are taxed. With VED now applied to electric cars and increased rates for polluting vehicles, understanding the new structure is essential for budgeting, especially if you’re purchasing a new car.
Vehicle Excise Duty (VED)
Vehicle Excise Duty (VED), commonly known as car tax or road tax, is a charge that vehicle owners must pay to legally operate their vehicles on UK roads. It’s administered by the DVLA and historically based on factors like vehicle type, fuel, and CO₂ emissions.
Until 2025, electric vehicles were exempt from VED, making them attractive for environmentally-conscious and cost-savvy motorists. But that landscape is changing.
What’s Changing in 2025 and Why?
The UK government announced in 2022 that EV exemptions would end from April 1, 2025, as part of a broader strategy to prepare for the net zero emissions goal by 2050. The new tax rules aim to level the playing field between traditional cars and EVs, which are no longer a niche choice.
By taxing EVs, the government hopes to secure sustainable revenue for road maintenance while encouraging all drivers to consider low-emission and fuel-efficient options.
This move also reflects a growing EV market. With over 1.1 million EVs registered in the UK as of 2024, this segment now represents a significant portion of vehicles using public roads and infrastructure.
Detailed Breakdown of the New Car Tax Rules
1. Electric Vehicles (EVs) Now Taxed
EVs were once the darlings of road tax exemptions, but from 2025, they face:
- Newly registered EVs (from April 1, 2025):
- First-year VED: £10
- Annual standard rate (from second year): £195
- Existing EVs registered between April 1, 2017 – March 31, 2025:
- Now taxed at the standard rate of £195/year
- Older EVs (registered before March 2017):
- Flat £20/year charge
2. Expensive Car Supplement Now Applies to EVs
Cars with a list price over £40,000, including many electric models like the Tesla Model 3 or Audi Q4 e-tron, must now pay a £425/year surcharge for five years from the second year of registration.
3. Higher First-Year Charges for Polluting Vehicles
The government has raised first-year VED bands for new petrol and diesel cars, based on their CO₂ emissions:
| CO₂ Emissions (g/km) | 2025 First-Year VED |
|---|---|
| 1–50 g/km | £110 |
| 51–75 g/km | £130 |
| 76–90 g/km | £270 |
| 91–100 g/km | £350 |
| 101–110 g/km | £390 |
| 111–130 g/km | £440 |
| 131–150 g/km | £540 |
| 151–170 g/km | £1,360 |
| 171–190 g/km | £2,190 |
| 191–225 g/km | £3,300 |
| 226–255 g/km | £4,680 |
| Over 255 g/km | £5,490 |
4. Hybrid and Alternative Fuel Vehicle Discounts Scrapped
The £10 annual discount for hybrid and alternative fuel cars has been eliminated. This includes plug-in hybrids (PHEVs) and mild hybrids.
5. Still Some Exemptions Available
There are VED exemptions still in place for specific groups, such as:
- Disabled drivers receiving certain mobility-related benefits
- Historic vehicles (over 40 years old)
- Public service vehicles or vehicles used for specific purposes (e.g., agricultural)
How Much Will This Cost You?
- Nissan Leaf (registered after April 1, 2025):
- 1st year: £10
- From 2nd year: £195/year
- Tesla Model Y (£45,000):
- 1st year: £10
- 2nd–6th year: £195 + £425 = £620/year
- Ford Focus 1.0L (CO₂: 122g/km):
- 1st year: £440
- Annual: £190
- Land Rover Defender (CO₂: 260g/km):
- 1st year: £4,680
- Annual: £190 + £425 (if over £40k)
Impact on Used Car Market
These changes are likely to make used cars more appealing, especially older EVs and low-emission petrol vehicles registered before 2025. Buyers may try to avoid the higher VED bands associated with newer models.
What You Should Do Next
- Check Your Vehicle’s Tax Band
- Visit gov.uk/check-vehicle-tax to confirm your VED
- Consider Emissions When Buying
- Vehicles with emissions under 90 g/km fall in lower tax brackets
- Budget for New EV Costs
- Prepare for £195 annual fee or more if your EV is over £40,000
- Reconsider Leasing vs Buying
- Leasing may reduce your long-term tax burden
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FAQs
Q1. Do I need to pay car tax for my EV now?
Yes. From April 1, 2025, EVs are taxed from £10 in the first year to £195 annually afterward.
Q2. Will older EVs also be taxed?
Yes. EVs registered before April 2017 now pay £20/year.
Q3. What is the “expensive car supplement”?
Cars over £40,000 pay an additional £425/year for five years from year two.
Q4. Are hybrids still eligible for discounts?
No. The £10 discount has been removed.
Q5. Is anyone still exempt?
Yes. Disability benefit recipients, owners of historic and special-purpose vehicles.
Q6. Will this impact insurance?
Possibly. Higher VED may increase the total cost of ownership and affect insurance quotes.
