Starting in April 2025, the UK will implement significant changes to its Vehicle Excise Duty (VED), commonly known as car tax. This change is designed to promote greener driving, ensure fairness, and maintain road infrastructure across the nation. In this article, we’ll explore what these new changes mean for petrol and diesel car owners, including practical advice, examples, and how to prepare for the new tax rates.
UK to Impose £5,490 Car Tax on Petrol and Diesel Drivers
| Key Aspect | Details |
|---|---|
| First-Year VED for High Emission Cars | Petrol and diesel cars emitting over 255g/km CO₂ will face a £5,490 first-year tax. |
| Standard Annual Rate | A flat £195 annual tax for all vehicles starting in the second year. |
| Luxury Car Supplement | A £425 additional charge for cars priced over £40,000, lasting five years. |
| Electric Vehicles (EVs) | EVs will be subject to a £10 first-year tax and the £195 standard annual rate, with a luxury car supplement for high-priced models. |
| Hybrid and Alternative Fuel Vehicles | They will no longer receive a discount and will be taxed at the standard rate of £195. |
The UK’s new car tax system, effective from April 2025, introduces significant changes for petrol and diesel car owners, as well as those driving electric and hybrid vehicles. The first-year tax is based on CO₂ emissions, with higher rates for more polluting vehicles. All cars will then pay a flat £195 annual fee from the second year, with additional charges for luxury vehicles and high-emission models.
These changes aim to encourage the adoption of cleaner, more efficient vehicles, while ensuring that all drivers contribute fairly to the maintenance of the UK’s road infrastructure. To avoid hefty tax bills, it’s wise to consider the emissions of your next car purchase and evaluate the total cost of ownership.
For the most accurate and updated information about VED rates, visit the official UK Government website. By staying informed, you can make the best decision for your wallet and the environment.
Introduction: The New Car Tax — What’s Changing?
As of April 2025, the UK is introducing new rules for Vehicle Excise Duty (VED), the tax you pay annually to drive your car on public roads. While the goal is to ensure that all drivers contribute fairly to the cost of maintaining road infrastructure, it also aligns with the UK’s ambitious environmental goals. For the first time, VED will be heavily influenced by your vehicle’s CO₂ emissions, with the aim of encouraging drivers to opt for cleaner, more efficient vehicles.
Under these new rules, if you drive a petrol or diesel car that emits high levels of CO₂, you could be facing a hefty bill. For instance, cars emitting over 255 grams of CO₂ per kilometer could see their first-year car tax skyrocket to £5,490. This is a significant jump from the current rates, but it is part of a broader strategy to lower emissions, reduce air pollution, and combat climate change.
But the changes don’t end there. The government is also introducing a standard flat rate of £195 for all vehicles from their second year onward, whether they are electric, petrol, diesel, or hybrid. This makes it easier for most drivers to understand their tax obligations, although there are some additional costs depending on the type of car you own.
Let’s take a closer look at the details of these changes and what they mean for you.
Understanding the Changes: A Closer Look at VED
1. First-Year Tax Rates Based on CO₂ Emissions
Under the new system, your car’s first-year VED will be based on the amount of CO₂ emissions it produces. The more emissions your car generates, the higher your first-year tax will be. Here’s how the tax rate works:
| CO₂ Emissions (g/km) | First-Year VED |
|---|---|
| 0–50 | £110 |
| 51–75 | £135 |
| 76–90 | £270 |
| 91–100 | £350 |
| 101–110 | £390 |
| 111–130 | £440 |
| 131–150 | £540 |
| 151–170 | £1,360 |
| 171–190 | £2,190 |
| 191–225 | £3,300 |
| 226–255 | £4,680 |
| Over 255 | £5,490 |
This means if your car emits over 255g/km CO₂, it will face a £5,490 tax in the first year, which is a considerable increase from the previous rate of £2,745 in 2024.
The rationale for this system is simple: it’s meant to encourage drivers to consider lower-emission vehicles, such as electric or hybrid cars, which have a much lower environmental impact.
2. Standard Annual Rate
After the first year, all cars, regardless of their emissions, will be subject to a flat annual VED of £195. This simplifies the system and makes it easier for drivers to predict their costs. It also ensures that drivers of all vehicle types, including electric vehicles (EVs) and hybrid cars, will pay a fair share toward road maintenance.
3. Luxury Car Supplement
If you own a luxury car that costs over £40,000, you will also face an additional £425 charge on your VED, which will be added to the standard £195. This extra charge will be levied for the first five years of your car’s life, regardless of whether it’s a petrol, diesel, or electric vehicle.
This is part of the government’s effort to ensure that those who can afford more expensive vehicles contribute more towards the upkeep of the UK’s roads.
4. Electric Vehicles (EVs)
EV owners will see a significant change under the new tax system. While EVs were previously exempt from VED, they will now face a £10 first-year tax. After the first year, they will also be taxed at the standard annual rate of £195.
If your EV costs more than £40,000, you will need to pay an additional £425 for the first five years, just like luxury petrol and diesel cars. The idea here is to level the playing field and encourage a fair contribution from all vehicle owners, including those driving electric and low-emission vehicles.
5. Hybrid and Alternative Fuel Vehicles
Previously, hybrid and alternative fuel vehicles (like those powered by hydrogen or compressed natural gas) received a £10 annual discount. However, starting in April 2025, this discount will be removed. These vehicles will now be taxed at the same rate as other vehicles, which is currently £195 per year.
This change reflects the government’s push towards stricter regulations for reducing CO₂ emissions, even for hybrid and alternative fuel vehicles.
Additional Insights: What This Means for You
How Can You Prepare for These Changes?
The new car tax system may feel overwhelming at first, but with a bit of planning, you can avoid surprises and manage your vehicle’s costs more effectively.
- Check Your Car’s CO₂ Emissions: Start by reviewing your vehicle’s CO₂ emissions data. This will give you a clear idea of how much your first-year tax will be. Vehicles with higher emissions will face a significantly higher first-year tax, so consider this when making your next purchase.
- Consider Switching to an Electric Vehicle (EV): If you’re eligible for the £10 first-year VED for EVs, now might be the best time to make the switch. Although the upfront cost of an EV may be higher, the long-term savings on tax and fuel could make it a more cost-effective choice. Plus, you’ll be doing your part to reduce pollution!
- Opt for a Lower-Emission Vehicle: Even if an electric car isn’t an option for you, consider hybrid or low-emission vehicles. These vehicles offer lower emissions than traditional petrol and diesel cars, which will help reduce your first-year car tax.
- Be Aware of the Luxury Car Supplement: If you’re eyeing a luxury vehicle that costs more than £40,000, be aware that you will face an additional £425 charge for the first five years. This is something to consider when budgeting for a new car.
- Plan Ahead for Your Next Vehicle: If you’re planning to buy a new car in 2025, try to factor the new tax system into your budget. Consider purchasing a vehicle before April 2025 if you want to avoid some of the higher first-year tax costs.
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FAQs About UK to Impose £5,490 Car Tax on Petrol and Diesel Drivers
1. How can I calculate my car’s VED?
You can calculate your vehicle’s VED by looking at its CO₂ emissions and applying the relevant first-year tax rates. For cars purchased after April 2025, all vehicles will pay a flat £195 annual rate after the first year.
For a more detailed breakdown and to check your vehicle’s VED, visit the UK Government’s Vehicle Tax Page.
2. Why is the government increasing the car tax?
The primary goal is to reduce carbon emissions and encourage drivers to use more environmentally friendly vehicles. The UK is aiming for net-zero carbon emissions by 2050, and reducing the number of high-emission vehicles on the road is a crucial part of this plan.
3. Will I be penalized if I drive an older car?
Not necessarily, but if your car has high CO₂ emissions, you will face a higher first-year tax under the new system. If you’re driving an older car that produces significant emissions, it may be worth considering upgrading to a more fuel-efficient or electric vehicle to reduce long-term costs.
4. Are there any exemptions from the new car tax?
While electric vehicles were previously exempt from VED, starting in April 2025, they will now pay a small £10 first-year fee and then the standard £195 per year. There are currently no exemptions for other vehicle types.
5. What happens if I don’t pay my car tax on time?
Failure to pay your car tax on time can result in fines, penalties, and potentially the seizure of your vehicle. Make sure to keep track of the due dates and renew your tax promptly.
