It’s hard keeping up with tax changes, particularly as it’s not the most interesting subject.So to help we’ve had a look at the main changes being introduced to Vehicle Excise Duty (VED), more commonly known as road tax, from 1^st April 2025. Here are the key amends that we feel could affect our customers and their cars.

Electric cars are no longer exempt

Electric cars were always exempt from road tax but from 1^st April that all changes. How much you will have to pay depends on when your car was registered. For all new electric cars registered from April 2025 you’ll pay £10 in the first year and then the standard rate for every year after that. Any electric cars registered between April 2017 and March 2025 will also pay the standard rate. The standard rate set for 2025/2026 is £195. Older electric cars registered before April 2017 will only pay £20 per year.

Electric cars now have to pay the Expensive Car Supplement

What’s more owners of electric cars registered on or after 1^st April 2025 will have to pay the Expensive Car Supplement (ECS) if the recommended retail price (RRP) of the car was above £40,000 when it was registered. That will mean paying an additional £410 per year on top for the first five years after it’s registered. The ECS remains in place for non-electric cars.

Petrol, Diesel and Hybrid cars all see road tax rises

The tax due on all non-electric cars, including hybrids, is also changing. What you’ll pay largely depends on when your car was registered, with the main changes affecting new cars registered from April 2025, whilst older cars mainly face inflation related increases.

For cars registered from 1^st April 2025 the tax rates are based on the car’s CO2 emissions.  As mentioned above zero emission cars will pay £10 in the first year and then the standard rate thereafter. Cars with emissions between 51-75g/km will pay £130 in the first year and the standard rate of thereafter. And cars with emissions of 76g/km and over will pay double the current level in the first year and the standard rate thereafter. The standard rate set for 2025/2026 is £195.

For cars registered between April 2017 and March 2025 the standard rate is increasing in line with inflation to £195 and there’s no discount for hybrid or alternative fuel cars. Cars registered between March 2001and March 2017 will also see their tax rates increase in line with inflation and any discounts for hybrid or alternative cars are removed. Older cars will also see their tax increasing in line with inflation whilst cars over 40 years old remain tax exempt.

Company car tax (BIK) will go up for all car types

The benefit-in-kind (BIK) rate for zero-emission vehicles will increase by one percent each year from 2025 to 2028. Currently 2 per cent, it will rise to 3 per cent in April 2025, then to 4 per cent in 2026 and 5 per cent in 2027. For vehicles producing 75g/km of CO2 or more, the BIK rate will increase by 1 per cent in April 2025 and stay that way until at least 2028. The rising percentage scale based on CO2 emissions remains, stopping at a maximum BIK of 37 per cent for high-emission vehicles (anything more than 170g/km).

For more details on all the current VED rates visit Vehicle tax, MOT and insurance - GOV.UK