Changes to Vehicle Excise Duty – What It Means for You
At the Autumn Budget in 2024, major changes to Vehicle Excise Duty (VED) and the Expensive Car Supplement (ECS)—commonly known as the "Luxury Car Tax"— we’re announced and will take effect from 1st April 2025.
What is Vehicle Excise Duty?
Vehicle Excise Duty (VED) is more commonly known as Road Tax and is paid by the registered keeper of the vehicle annually in the UK. The amount that you pay for your vehicle depends on a number of factors that include the vehicles registration date and the environmental performance of the car (the g/km of C)2 that it emits). This increase in road tax is in line with the Retail Price Index (RPI)
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1st Year VED Rate Changes 2024 vs 2025
| CO2 Emissions (g/km) | 2024 VED (Petrol & Diesel) | 2024 VED (AFV) | 2025 VED | VED Rate Change |
| 0 | £0 | £0 | £10 | +£10 |
| 1-50 | £10 | £0 | £110 | +£110 |
| 51-75 | £30 | £20 | £130 | +£110 |
| 76-90 | £135 | £125 | £270 | +£145 |
| 91-100 | £175 | £165 | £350 | +£185 |
| 101-110 | £195 | £185 | £390 | +£205 |
| 111-130 | £220 | £210 | £440 | +£230 |
| 131-150 | £270 | £260 | £540 | +£280 |
| 151-170 | £680 | £670 | £1,360 | +£690 |
| 171-190 | £1,095 | £1,085 | £2,190 | +£1,105 |
| 191-225 | £1,650 | £1,640 | £3,300 | +£1,660 |
| 226-255 | £2,340 | £2,330 | £4,680 | +£2,350 |
| Over 255 | £2,745 | £2,735 | £5,490 | +£2,755 |
These changes will impact all new vehicles, including electric cars, and could result in higher costs for new vehicles. However, you can avoid this increase in vehicle tax, if you purchase and take delivery of your new car before 1st April 2025, you will avoid the upcoming vehicle excise duty (VED) increase, which will see some rates double from 1st April.
Electric Cars
- First year rate: £10 for all zero emission vehicles.
- Standard rate (second year onwards): £195 for the 2025/26 tax year.
- Additional rate (expensive car supplement or luxury car tax): New electric and zero emission vehicles with a list price of more than £40,000 will attract an additional charge of £425 annually for 5 years from the second year of registration.
Petrol & Diesel Vehicles
- First year rates: The VED for new petrol and diesel cars will double from the current levels with rates varying dependent on CO2 emissions.
- Standard rate (second year onwards): £195 from the second year onwards
- Additional rate (expensive car supplement or luxury car tax): Brand new petrol and diesel cars with a list price in excess of £40,000 will attract a £425 additional charge annually from the second to sixth year of registration.
What Should You Do?
With these increases on the horizon, March 2025 presents a key opportunity to secure a new vehicle before the new tax rates take effect on April 1st 2025.
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