From April 1, 2025, vehicles emitting over 255g of CO₂ per kilometre will experience a substantial first-year VED increase from £2,745 to £5,490. A total of 59 car models across 24 brands will be impacted by the tax hike, and EVs will no longer be exempt from VED.
The UK government is implementing substantial changes to Vehicle Excise Duty (VED) effective from April 1, 2025, aiming to promote the adoption of low-emission and electric vehicles. These changes will significantly impact the taxation of various vehicle categories. Here's an updated overview:
The government's initiative seeks to encourage motorists to transition to lower-emission and electric vehicles by increasing the cost of owning high-emission cars. Notably, vehicles emitting over 255g of CO₂ per kilometre will experience a substantial first-year VED increase from £2,745 to £5,490.
The revised VED rates, effective from April 1, 2025, are as follows:
| CO₂ Emissions (g/km) | Old First-Year Tax (£) | New First-Year Tax (£) |
|---|---|---|
| 0 | 0 | 0 |
| 1-50 | 10 | 10 |
| 51-75 | 25 | 25 |
| 76-90 | 115 | 115 |
| 91-100 | 140 | 140 |
| 101-110 | 180 | 180 |
| 111-130 | 220 | 220 |
| 131-150 | 270 | 270 |
| 151-170 | 645 | 645 |
| 171-190 | 1,040 | 1,040 |
| 191-225 | 1,565 | 1,565 |
| 226-255 | 2,745 | 2,745 |
| Over 255 | 2,745 | 5,490 |
Note: The standard rate for subsequent years will be £195 for all vehicles, with an additional £425 annual surcharge for cars with a list price over £40,000, applicable for five years from the second year of registration.
A total of 59 car models across 24 brands will be impacted by the tax hike. These predominantly include luxury performance vehicles, powerful SUVs, and large-engined sports cars. Notable models affected are:
This list is not exhaustive; owners should verify their vehicle's CO₂ emissions to determine specific tax implications.
While the increased VED primarily affects new car purchases, a ripple effect on the used car market is anticipated. Owners of high-emission vehicles may seek to sell their cars before the tax hike, potentially increasing the supply of such models and reducing their resale values. Conversely, demand for lower-emission used vehicles, including hybrids and electric cars, may rise, leading to higher resale values for these models. Prospective buyers of performance cars in the second-hand market should consider the increased road tax when evaluating total ownership costs.
Certain vehicles and owners may qualify for exemptions or discounts:
From April 1, 2025, EVs will no longer be exempt from VED. New EVs registered after this date will pay £10 in the first year and £195 annually thereafter. EVs registered between April 1, 2017, and March 31, 2025, will pay £195 annually, while those registered before April 1, 2017, will pay £20 annually.
The £10 annual discount for hybrid and alternatively fueled vehicles will be removed from April 1, 2025. These vehicles will pay the standard rate of £195 annually, depending on their registration date.
Individuals receiving specific disability benefits may be eligible for full exemption or a 50% reduction in VED. Eligible benefits include the higher rate mobility component of Disability Living Allowance (DLA) and the enhanced rate mobility component of Personal Independence Payment (PIP). Vehicles must be registered in the disabled person's name or their nominated driver's name and used solely for the disabled person's personal needs.
Vehicles over 40 years old are exempt from road tax. This rolling exemption applies to cars constructed more than forty years before the start of the current year.
The forthcoming VED changes represent a strategic move by the UK government to expedite the transition towards a greener automotive landscape. Prospective car buyers should meticulously assess the long-term ownership costs, including VED, fuel expenses, and potential resale values, when considering.
Would you still buy one of these high-performance vehicles despite the tax increase? Let us know your thoughts in the comments!
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