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Vehicle Tax Changes for 2025

Date Posted: 07 March 2025

From 1 April 2025, registered keepers of electric, zero or low emission cars, vans and motorcycles will need to pay vehicle tax in the same way as registered keepers of petrol and diesel vehicles. This change will apply to both new and existing vehicles.

This new measure removes band A under the existing VED system which is currently £0. Vehicles in this band will be required to move to the first band where a rate becomes payable.

How the changes will affect your vehicle

Electric, zero or low emission cars registered on or after 1 April 2025

You will need to pay the lowest first year rate of vehicle tax set at £10 from 1 April 2025. From the second tax payment onwards, you will pay the standard rate. This will be £195.

Electric, zero or low emission cars registered between 1 April 2017 and 31 March 2025

You will pay the standard rate. This will be £195.

Electric, zero or low emission cars registered between 1 March 2001 and 31 March 2017

These vehicles will move to the first band that has a VED value. This will be £20.

Hybrid and alternatively fuelled vehicles (AFVs)

The £10 annual discount for hybrid and AFVs will be removed, and the rate you will pay will depend on when the vehicle was first registered. If the vehicle was:

  • registered before 1 April 2017 - this rate will depend on the vehicle’s CO2 emissions 
  • registered on or after 1 April 2017 - you will pay the standard rate (this will be £195)

Electric vans

Most electric vans will move to the standard annual rate for light goods vehicles. 

Additional rate (expensive car supplement)

New electric and zero emission vehicles registered on or after 1 April 2025 with the list price exceeding £40,000 will attract the standard rate, plus the expensive car supplement for the first 5 years from the start of the second licence.


First-Year Car Tax Rates Increase

When you buy a brand-new car, the first year's tax is calculated based on emissions, so it differs from the standard rate.

Starting 1 April 2025, electric cars will now pay first-year road tax (a first for new EVs), and petrol and diesel cars will also face significant increases.

Here’s what the tax bands will look like for petrol, hybrids, and RDE2-compliant diesel cars from 1 April 2025:

  • 0g/km – £10 (previously £0)
  • 1-50g/km – £110 (previously £10)
  • 51-75g/km – £130 (previously £30)
  • 76-90g/km – £270 (previously £135)
  • 91-100g/km – £350 (previously £175)
  • 101-110g/km – £390 (previously £195)
  • 111-130g/km – £440 (previously £220)
  • 131-150g/km – £540 (previously £270)
  • 151-170g/km – £1360 (previously £680)
  • 171-190g/km – £2190 (previously £1095)
  • 191-225g/km – £3300 (previously £1650)
  • 226-255g/km – £4680 (previously £2340)
  • 255+g/km – £5490 (previously £2475)

Get an Extra Year of Free Road Tax for Your Electric Car

You can renew your road tax anytime, so if you renew before 1 April 2025, you can enjoy road tax-free driving until March 2026.

Simply follow the online process using your vehicle’s number plate and the 11-digit reference number from your V5C logbook, and you're all set.

The government website will ask if you're sure, as you'll technically be taxing your car twice until the original road tax expires. However, since you didn't pay the previous tax and won't pay now, it's not an issue.

That’s £195 saved for another year!

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Sherwoods Motor Group Limited is an Appointed Representative of Automotive Compliance Ltd, who is authorised and regulated by the Financial Conduct Authority (FCA No 497010). Automotive Compliance Ltd’s permissions as a Principal Firm allows Sherwoods Motor Group Limited to act as a credit broker, not as a lender, for the introduction to a limited number of lenders and to act as an agent on behalf of the insurer for insurance distribution activities only.

We can introduce you to a selected panel of lenders, which includes manufacturer lenders linked directly to the franchises that we represent. An introduction to a lender does not amount to independent financial advice and we act as their agent for this introduction. Our approach is to introduce you first to the manufacturer lender linked directly to the particular franchise you are purchasing your vehicle from, who are usually able to offer the best available package for you, taking into account both interest rates and other contributions. If they are unable to make you an offer of finance, we then seek to introduce you to whichever of the other lenders on our panel is able to make the next best offer of finance for you. Our aim is to secure the best deal you are eligible for from our panel of lenders. Lenders may pay a fixed commission to us for introducing you to them, calculated by reference to the vehicle model or amount you borrow. Different lenders may pay different commissions for such introductions, and manufacturer lenders linked directly to the franchises that we represent may also provide preferential rates to us for the funding of our vehicle stock and also provide financial support for our training and marketing. But any such amounts they and other lenders pay us will not affect the amounts you pay under your finance agreement, all of which are set by the lender concerned. If you ask us what the amount of commission is, we will tell you in good time before the Finance agreement is executed. All finance applications are subject to status, terms and conditions apply, UK residents only, 18’s or over. Guarantees may be required.

Regulated Complaints Post: Automotive Compliance Ltd, The Factory, 44 Alfred Street, Gloucester, GL1 4DD Telephone: 01452671560 E-mail: complaints@automotive-compliance.co.uk. If we cannot resolve your complaint within 8 weeks, you may refer your dispute to the Financial Ombudsman Service. This service is free to use. Their consumer helpline is available on 0800 023 4567 or 0300 123 9123 or you can visit their website at www.financial-ombudsman.org.uk.

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Company Number: 02876229

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