New Car Tax Rates 2025 UK — VED Increases & EV Changes Explained

New Car Tax Rates 2025: What UK Drivers Need to Know

From 1 April 2025, the UK’s Vehicle Excise Duty (VED), commonly known as car tax or road tax, will see some of its biggest changes in years. Most notably, electric cars (EVs) will no longer be exempt, first‑year tax rates are rising sharply, and the luxury car supplement will also apply to EVs.

This blog explains the new car tax rates for 2025, how they differ by vehicle type, and what this means for drivers buying or owning cars in the UK.

What Is Vehicle Excise Duty (VED)?

VED (car tax) is a legal requirement for all UK cars used on public roads.

Based on CO₂ emissions for the first year (new cars).

After the first year, most cars move to a standard flat rate.

Additional “luxury supplement” applies if the car’s list price was over £40,000.

What’s Changing in 2025?

Electric vehicles lose exemption
- New EVs (registered on/after 1 April 2025): £10 first year, £195 standard rate annually after.
- EVs registered 2017–2025: previously £0, now £195 annually.

First‑year rates are rising significantly
- Petrol and diesel cars will see higher charges, with many CO₂ bands doubling in cost.

Luxury car supplement applies to EVs
- Cars over £40,000 (including EVs) pay £425/year for years 2–6.

Standard flat rate updated
- Almost all cars pay £195 annually after the first year.

New 2025 VED Rates Explained

First year rates: still based on CO₂ emissions but rising across most bands.

Zero-emission cars: £10 first year.

Standard rate (after first year): £195 for most cars.

Luxury supplement: £425/year for cars with a list price over £40,000, applied years 2–6.

(Example: A £42,000 EV registered in April 2025 pays £10 in year one, £195 + £425 annually for the next five years, then £195 standard rate from year 7.)

Impact on Electric & Low Emission Cars

EVs lose the exemption that previously saved owners hundreds annually.

Low-emission cars (under 100 g/km CO₂) also face higher first‑year taxes.

Owners of premium EVs (Tesla, BMW iX, etc.) hit hardest by £40,000+ supplement.

Car Tax for Older Vehicles

Cars registered 1 March 2001 – 31 March 2017: still on CO₂ bands.

Some low‑emission cars that were zero‑tax now pay £20+.

Cars registered before 2001 use engine size rules.

Examples of 2025 Car Tax Costs

Example 1: Petrol car with 120 g/km CO₂ → higher first‑year rate, then £195/year.

Example 2: New EV (registered April 2025) → £10 first year, then £195/year.

Example 3: £42,000 EV → £10 first year, then £620/year (standard £195 + £425 supplement) for five years.

What Drivers Should Do

Factor in car tax when budgeting for a new car purchase.

If buying EVs, consider whether the luxury supplement applies.

Compare overall running costs (insurance, fuel/charging, maintenance + VED).

Keep updated via GOV.UK official rate tables.

Frequently Asked Questions

Q1: Will my current electric car stay tax-free?
No. EVs registered from 2017 onwards will pay the £195 standard rate from April 2025.

Q2: How much is the first year for EVs in 2025?
£10 for brand-new EVs.

Q3: What is the luxury car supplement?
An extra £425/year applied for 5 years on cars costing over £40,000.

Q4: Do second-hand cars pay the supplement?
Yes, if their original list price exceeded £40,000.

Q5: Will older petrol/diesel cars also see changes?
Yes. Many lower bands are increasing, and older “zero tax” cars will pay at least £20.

Summary

The 2025 car tax changes mark a major shift for UK drivers, particularly for EV owners losing tax exemptions and anyone buying a car over £40,000. The flat standard rate of £195 simplifies things but also raises costs for vehicles that previously paid less. Always check the latest official figures before buying a new car.

(Tip: If you’re buying a new or used car, ensure your number plates are DVLA-compliant. Use our Easy Number Plates Builder to design and order legal plates quickly.)