Planning to buy a car in 2025? Make sure you know about the latest updates to Vehicle Excise Duty (VED). These changes could significantly impact your budget, depending on what type of car you have in mind to buy. This guide will talk you through everything you need to know about VED car tax and the changes being introduced in 2025, including:
- First-year rate changes
- Existing vehicles rate changes
- Electric car rate changes
What is VED tax?
Vehicle Excise Duty (VED), commonly known as ‘road tax’ or ‘car tax’, is a compulsory annual tax for vehicle owners in the UK. It can differ wildly depending on the vehicle you own, as it’s based on several factors including:
- Emissions: cars with higher CO₂ emissions attract higher tax rates
- Vehicle type and fuel: diesel, petrol, hybrid and electric vehicles are all taxed differently
- Vehicle age: older models are taxed under different rules than newer models
Why is VED car tax changing in 2025?
VED car tax rates are regularly revised. The 2025 VED tax changes are part of the Labour government’s initiative to modernise the tax system, and were introduced in the 2024 Autumn Budget. The updates are designed to reflect:
- Economic climate: adjusting rates in line with inflation
- Environmental priorities: incentivising the transition to electric vehicles to reduce emissions
What are the VED car tax changes for 2025?
The changes for 2025 include revisions to first-year rates, changes for existing vehicles and new rules for electric cars.
First-year rates
First-year VED rates are determined by the car’s emissions. These changes only impact the cost of VED for the first year the car is registered, i.e. the first-year rate.
Current first-year rates
Under the current system:
- Cars emitting 0g/km of CO₂ pay no VED
- Cars emitting 1-50g/km of CO₂ pay up to £30 VED
- Cars emitting 51-75g/km of CO₂ pay up to £135 VED
- Cars emitting 76-90g/km of CO₂ pay up to £175 VED
- Higher emission vehicles pay up to £2,735 VED
* View the full breakdown of rates of vehicle tax here.
Low or zero-emission vehicles, including hybrid vehicles, have been favoured with minimal VED charges.
New first-year rates
From April 2025:
- Cars emitting 0g/km of CO₂ pay up to £10
- Cars emitting 1-50g/km of CO₂ pay up to £110 VED
- Cars emitting 51-75g/km of CO₂ pay up to £130 VED
- Cars emitting 76-90g/km of CO₂ pay up to £350 VED
- Higher emission vehicles pay up to £5,490 VED
* View the full breakdown of rates of vehicle tax here.
These changes reflect a government push towards the adoption of new electric vehicles, e.g. cars emitting over 76g/km of CO₂ can expect first-year road tax rates to increase significantly.
Existing vehicles
VED for existing vehicles will increase in line with the Retail Performance Index (RPI), as in previous years. This incremental rise ensures that the tax system keeps pace with inflation.
This rate will come into effect from year two of the car’s life:
- Petrol or diesel cars pay up to £199.50
- Alternative fuel type cars pay up to £189
- Petrol or diesel cars that cost more than £40,000 pay up to £630
- Alternative fuel type cars that cost more than £40,000 pay up to £619.50
* View the full breakdown of rates of vehicle tax here.
Electric cars
Significant changes to EV VED charges are being introduced from 1st April 2025 to “make our motoring tax system fairer”.
New VED tax rules for electric cars
Low-emission cars will face substantial price rises. The VED exemption for electric cars will be removed with a general shift to the standard rate, perhaps reducing the incentive for people to switch to electric vehicles.
- New electric vehicles will no longer be exempt from VED car tax
- The lowest first-year rate for EVs will set at £10 from 1st April 2025
- From the second tax payment onwards, electric, zero or low emissions cars will be charged the standard rate of £195
* View the full breakdown of rates of vehicle tax here.
The Expensive Car Supplement
Whilst all other types of vehicles already have to pay the Expensive Car Supplement, the exception for EVs is coming to an end from 1st April 2025. New electric, zero and low emissions cars with a list price of over £40,000 will have to pay the standard VED rate, as well as the Expensive Car Supplement for the first 5 years from the start of the second licence.
Zero-emissions vans and motorcycles
- Zero emission vans will move to the same rate as petrol/diesel light good vehicles.
- Zero emission motorcycles will move to the same rate as the smallest petrol/diesel engine size.
What our experts have to say
“The 2025 VED changes are a clear indicator from the government to encourage EV adoption whilst ensuring fairness across all vehicle types. Buyers should consider these updates carefully and the financial implications they could have when purchasing a car.”
- Nicholas Shaw – Director of Operations, Dayinsure
How to check your VED tax
You can check your VED tax online by using the DVLA website. Simply visit the site, enter your vehicle’s registration details and you’ll be provided with your vehicle’s emissions and tax band.
VED tax FAQs
Find out more about VED car tax with these commonly asked questions, answered by our experts.
How often does VED car tax change?
VED car tax rates are typically updated annually in line with inflation and government policies.
Is VED tax the same as road tax?
Yes, VED is the official term for ‘road tax’ or ‘car tax’ in the UK.
How can I pay my VED car tax?
You can pay your VED car tax online, via phone or in person. Your VED must be settled prior to driving your new car.
How do you SORN a car?
You may find yourself in the situation where you won’t be driving your car for a while, perhaps if you’re going away travelling or you’re not physically able to drive for a period of time. In these cases, you can SORN (Statutory Off Road Notification) your car so you don’t have to pay road tax for the duration of that period. You can find out more about this in our guide, How to SORN a car.
Further financial considerations when buying a car
When budgeting for a new vehicle, don’t forget these important financial considerations:
- Insurance costs
- Maintenance and repairs
- Fuel or charging costs
- Depreciation
Take a look at our handy guide, How to Buy a Car, for more top tips and considerations when buying a car.
Insure yourself to test drive cars with Dayinsure
Thinking of test driving your next car? Dayinsure makes this possible with flexible, short-term car insurance. Get cover quickly for a wide range of vehicles, and be on the road in as little as 15 minutes.
