Starting in 2025, there will be significant alterations in the UK’s Vehicle Excise Duty (VED) to be implemented across the country. They are intended to be part of the government’s plan to support its net zero emissions target without overburdening the funding of road maintenance. If you would like to know the amount of car tax to be paid in 2025, then you will have to follow such updates.
The government will remove the zero-emission vehicle (ZEV)—an electric car, for instance—from the list of vehicles that don’t pay VED for the first time. Drivers of petrol and diesel vehicles would equally pay higher taxes if their car is classified as highly emitting.
These updates will enable you to effectively budget and explore greener, more cost-effective alternatives to reduce motoring expenses in the long run.
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What is Vehicle Excise Duty (VED)?
The cost for most cars used in the United Kingdom is called the Vehicle Excise Duty, or car tax. That is based on the car’s emissions, the type of fuel it uses, and the list price of the car. VED rules have been adjusted to accommodate the UK government’s net zero carbon emission by the year 2050.
The changes are for 2025, and they only affect zero-emission vehicles and traditional fuel-powered cars. All drivers are paying towards road maintenance and the environment.
Key Changes in Car Tax for 2025
1. Introduction of VED for Zero-Emission Vehicles (ZEVs)
Formerly, vehicles such as pure electric cars could be registered with zero-emission vehicle (VED) rebates. Elements of this policy reflect the UK government’s plan to eradicate petrol and diesel cars. However, from April 2025, they will be paying VED similar to other vehicles, but from April 2015, owners of ZEVs will pay a reduced rate of VED.
- First-Year Tax for ZEVs: From April 2025, new ZEVs registered will start paying the first-year VED rate at the car’s price band rate, the same as for traditional fuel-powered cars.
- Standard Annual Tax: From the first year onwards, ZEV owners will pay a standard flat rate of £165 per year (subject to potential adjustment).
- Older Electric Cars: From 2025, even EVs registered before April 2025 will pay the flat standard rate.
2. Increased Costs for Petrol and Diesel Vehicles
Petrol and diesel cars will remain taxed according to their carbon dioxide (CO2) emissions, but the rates are predicted to increase to match the government’s environmental objectives.
First-Year VED Rates: Higher first year rates will apply to cars which emit 151g/km or more of CO2. For example, vehicles with emissions above 255g/km could see over £2,605 in first year VED.
Standard Rates: These vehicles will also have increased annual charges after the first year. That change makes higher-emission cars take on a greater financial burden.
3. Impact on Premium Cars (£40,000+)
A supplementary tax, the ‘Premium Car Supplement,’ applies to cars with a list price of more than £40,000. This supplement covers the first five years of ownership, and zero-emission vehicles registered from April 2025 will also be covered.
- Current Rate: The standard rate is £390 plus a Premium Car Supplement of £390 per annum.
- Updated Scope: This added charge will also now be paid on electric vehicles priced at more than £40,000.
How These Changes Affect Different Vehicle Categories
Electric Vehicle Owners
For years, electric vehicle (EV) owners have enjoyed zero Vehicle Excise Duty (VED), meaning EVs have been an attractive option for those wanting lower running costs. But from April 2025, that will all change. From this date, standard VED rates will apply to new EVs registered. Just like petrol and diesel cars, the tax will depend on the price of the vehicle in their first year. After the first year EVs will move onto the standard flat rate, now set at £165.
That means older EVs, even those registered before April 2025, will no longer be exempt. From 2025, they will be forced to pay the flat standard rate. EVs with a list price of more than £40,000 will also be subject to the Premium Car Supplement, which increases by £390 per year for the first five years of ownership. Thanks to lower fuel and maintenance costs, EVs are still cheaper to run than petrol or diesel cars, but these changes cut the financial edge.
Petrol and Diesel Vehicle Owners
Owners of traditional petrol and diesel vehicles will continue to see increases in VED, but much more so for those with higher-emitting vehicles. First-year rates for vehicles with over 151g/km of CO2 are rising significantly. Cars that produce more than 255g/km of CO2 could pay more than £2,605 in first-year VED.
Petrol and diesel cars will also see their annual standard rates increase, reflecting the fact that higher-emission vehicles should pay more. The changes are meant to promote a transition to low-emission vehicles and are in line with the government’s environmental goals. Owners of petrol and diesel cars can expect these updates to lead to higher annual motoring costs.
Owners of Older Cars
Those changes will not be avoided by older vehicles, whether petrol, diesel or electric. Cars already in use will move to the new flat rates from 2025. The tax will remain on a car’s basis, but for EVs, the tax will be a flat rate per year. This also means that older vehicles are also helping to keep our roads maintained and environmentally sustainable.
Preparing for the 2025 VED Changes
As we head towards 2025, when the vehicle excise duty, or as most people know it, road tax, is expected to change drastically, it is about time car owners started planning. Here are the main points of preparation to open the curtain of updates and observe the impact they will bring on your financial situation.
1. Check Your Vehicle’s Emissions
First, check your car’s CO2 emissions, which determine your VED rates. This is important for petrol and diesel owners, especially since high-emission vehicles will see steeper first-year and annual rates. If you are an EV owner, it will help you determine if your car is a zero-emission car and if it is a Premium Car Supplement eligible one to work out future costs.
2. Calculate Your Future Costs
Estimate your tax liability by using your vehicle’s emissions and list price. New EV owners should expect first year VED charges and the standard rate of £165 a year from 2025. Petrol or diesel car owners should also factor in the possibility of rises in both first and running rates.
3. Explore Greener Alternatives
If your car’s emissions are currently that high, you should consider switching to a lower-emission or electric car. EVs will still be cheaper to run than petrol or diesel vehicles, but tax-free days are over. In addition, early switching can reduce higher VED costs.
Why Are These Changes Happening?
As part of a wider plan to make roads self-fund in terms of maintenance, the UK government has chosen to tax zero-emission vehicles. However, the growing adoption of EVs has led to a funding gap, as the loss of fuel duty and VED exemptions means revenue has been lost. By smoothing the shift away from petrol and diesel vehicles with a modest charge for ZEVs, the government wants to ensure fairness.
Potential Cost Comparison: 2024 vs. 2025
To understand the impact of these changes, let’s compare estimated annual VED costs for different vehicle types:
| Vehicle Type | 2024 Tax Rate | 2025 Tax Rate (Estimated) |
| Electric Car (<£40,000) | £0 | £165 |
| Electric Car (>£40,000) | £0 | £555 (incl. Premium Car Supplement) |
| Petrol/Diesel (100g CO2) | £155 | £165 |
| Petrol/Diesel (151g CO2) | £585 | £700+ |
| High-Emission Car (>255g CO2) | £2,365 (First Year) | £2,605 (First Year) |
Conclusion
VED changes to be implemented in 2025 are the most significant revolution in the UK car tax regime in decades. Regardless of whether you own an EV or a gasoline car, annual motoring expenses will most probably shift. If you are aware of how much your car tax will be in 2025 and where to look at the options, then you can consider how to deal with these effects.
Source: Gov.uk | Parkers | Autoexpress
