All the key car tax changes coming in April

A series of new taxes are set to be brought in that will affect petrol, diesel and electric vehicles.

Owning and driving a car is set to become more expensive next month – including for those with an electric vehicle – when changes to road tax will come into effect.

Most of the changes will be centred around vehicle excise duty (VED, also known as car tax or road tax), which will see most motorists end up paying more.

Drivers will face rules and prices depending on whether the vehicle was registered after 1 April, 2017. There are similar cut-offs for 2001 and 1984.

A new road tax system was introduced in April 2017 and the recent changes only apply to cars registered after that date. Cars registered before then will pay rates under the old system.

Petrol and diesel car tax changes

The biggest changes to vehicle excise duty come in the tax paid on brand new vehicles in their first year, also known as the ‘showroom tax’.

All cars in the UK are subject to two different rates of VED – for the first year after purchase, and then every year after that at the standard rate.

A car’s first-year tax is calculated by taking into account how much CO2 it produces, with costs dramatically increasing the more emissions it releases.

The new rates are:

• Zero emission cars will pay the lowest rate at £10 until 2029-30
• Rates for cars emitting 1-50 g/km of CO2, including hybrid vehicles, will increase from £10 to £110 for 2025-2026
• Cars emitting 51-75 g/km of CO2, including hybrids, will increase to £130
• All other rates for cars emitting 76 g/km of CO2 and above will double from their current level

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For example, from 1 April a new Ford Puma driver can expect a first-year VED rate rise from £220 to £440, while a buyer of a Range Rover could pay as much as £5,490 – up from £2,745 – in the first year of ownership.

Broadly speaking, first-year VED charges are included in the monthly payment plan for car finance and leasing deals, which will soften the impact for some new car buyers.

The second-year rate will remain the same for all petrol and diesel cars at £190.

Electric vehicle tax changes

EV owners are also losing some exemptions as the government tries to recoup losses made from the switch away from combustion engines.

From 1 April, electric vehicle owners will need to pay vehicle tax in the same way as other car owners for the first time. This change will apply to both new and existing vehicles.

For the first year tax, EV drivers will only need to pay £10.

All electric cars purchased between 1 April 2017 and 1 April 2025 will need to pay the standard £195 vehicle tax from the second tax payment onwards.

An electric car bought before 1 April 2017 will pay under the old system, which is £20 a year.

Hybrids registered on or after 1 April 2017 will also lose their £10 VED discount from 1 April 2025. Instead, they will they will pay the same £195 flat annual rate from years two through to six as every other car.

Hybrids registered before 1 April 2017 will pay a rate dependent on the vehicle’s CO2 emissions.

Additionally, new EVs will also be liable for the luxury vehicle tax, known as the expensive car supplement, if priced above £40,000.

The surcharge, which costs £425 a year, is payable annually between the second and sixth years of a car’s lifespan, even if the vehicle’s ownership changes hands.

Older cars

Models registered between 1984 and 2001 are also affected by the changes with slight increases compared to previous rates.

These older vehicles are priced under a slightly different tax system with varying rates for cars with engine sizes above or below 1549cc.

This means owners pay a slight £10 increase with rates up from the current £210 per year charge for cars with smaller engines.

Meanwhile, those with power above the 1549cc threshold will pay £15 more from April at £360.

Classic cars that are over 40 years old are exempt from road tax, along with vehicles used by disabled people, cars used to transport disabled passengers and agricultural vehicles such as tractors.

What about vans?

Vehicle excise duty rates for commercial vehicles (vans and pick-up trucks) are much simpler, because there is just a flat rate.

For the 2024/2025 tax year the cost is £335 for 12 months. From 1 April this will increase in line with the retail price index (RPI) to £345.

Although not currently liable, electric van owners will also be required to pay the flat rate VED on their vehicles from 2025 onwards.

Have VED rates gone up for motorcycles?

Vehicle excise duty applies to motorbikes as well as cars. Motorcycle tax is a bit simpler and only depends on the size of a bike’s engine (CCs). So, the larger the engine, the more you pay. The rates range from £25 to £117 per annum.

At the moment, electric motorcycles and tricycles don’t have to pay road tax but this will change next month as their exemption is scrapped.

Electric motorcycles and tricycles will move to the annual rate for the smallest engine size, which is currently £25 a year.