Drivers across the UK are bracing for significant changes to vehicle tax rates following the launch of new Vehicle Excise Duty (VED) regulations that took effect on April 1, 2025. These changes, announced in the Autumn Statement by Chancellor Rachel Reeves, are expected to hit motorists hard, especially those with petrol and diesel vehicles. The updates mean some drivers will face increases of up to £150 in their annual car tax, creating what experts are calling a "major financial shock" for many.
The DVLA has been proactive in reminding drivers to keep their vehicle tax payments up to date, posting on social media: "Don’t forget to pay your vehicle tax!" Failure to do so could result in an £80 fine just for being the registered keeper of an untaxed car. If drivers are caught driving without paying their tax or without declaring their vehicle as off-road with a SORN, the penalties escalate dramatically to £1,000 or five times the amount of tax owed.
Motorists with cars manufactured between 2001 and 2017, specifically those with number plates ranging from Y to 67, will find that their tax rates are based on CO2 emissions. The new regulations mean that those with vehicles emitting between 121-130g/km and 141-150g/km will see a £5 increase in their tax this year. For cars emitting between 151-165g/km and 186-200g/km, the hike will be £10. The most polluting vehicles, those emitting over 226g/km, will face a whopping £25 increase in their annual tax.
Electric vehicles, which previously enjoyed tax-free status, will now be subject to a lower rate of £20 if they were manufactured before 2017. This marks a £20 increase compared to the previous rate of zero. The changes come as part of a broader effort to create a fairer tax system, though many drivers who switched to electric vehicles are expressing their dissatisfaction with this new requirement.
According to breakdown experts at the AA, the financial implications of these changes are profound. Jack Cousens from the AA remarked, "VED changes and future increases threaten a major financial shock to the finances of millions of car owners whose vehicles are still paying VED under the 2001-2017 CO2-banded system." He noted that individuals driving older, low-CO2 vehicles could see their annual car tax rise by £150 or more as they transition to the current standard VED rate.
With the average car owner already paying £436.84 in fuel duty annually, or £524.21 with VAT, a £150 increase in VED represents a significant percentage hike—34% on top of existing fuel costs (29% when VAT is included). This has led to concerns among drivers about the cumulative financial burden of maintaining their vehicles.
Drivers can utilize a free online tool provided by WeBuyAnyCar to check their vehicle's CO2 emissions and determine their corresponding tax band. This tool is particularly useful given that a significant 58% of UK drivers are subject to the older vehicle VED scheme based on CO2 emissions. The number plate checker allows motorists to find out essential details about their vehicle, including engine size, power, and CO2 emissions, aiding them in understanding their new tax obligations.
New petrol, diesel, and electric models registered after 2017 will also see an increase in VED prices, with standard fees rising from £190 to £195. Vehicles registered between 1985 and 2001 will face an increase of up to £20 in VED charges, calculated based on engine size. These changes reflect the government's ongoing strategy to encourage more environmentally friendly vehicle purchases while also addressing inflationary pressures.
As the new tax rates roll out, the DVLA is urging drivers to stay informed and proactive about their vehicle tax status. With the financial implications of these changes potentially affecting millions, it is crucial for car owners to verify their tax rates and plan accordingly. Ignoring these updates could lead to unexpected costs and penalties, making awareness and timely action more important than ever.
In summary, the new VED rates are set to significantly impact UK drivers, particularly those with older petrol and diesel vehicles. The combination of increased tax rates and the removal of tax exemptions for electric vehicles has prompted a wave of concern among motorists. As the landscape of vehicle taxation evolves, drivers must navigate these changes carefully to avoid financial pitfalls.
