April 2025 will see significant rises across the board for VED (vehicle excise duty), with some costly changes to First Year Rates. If you’re planning on buying a new car from April 2025, make sure you read on to know how much extra tax you might be facing.
VED, colloquially known as road tax, remains one of the essential annual costs of car ownership, and navigating its complexities can be tricky, given frequent updates to tax bands.
Rachel Reevse, the Chancellor of The Exchequer, confirmed a shake-up of First Year Rates for VED for 2025 in her 2024 Autumn Budget. The First Year Rate – also known as the showroom tax – is a higher rate of tax paid on a brand-new car. Linked to carbon dioxide emissions, it had previously heavily favoured low and zero-emission cars, including hybrids as a way of incentivising the adoption of more environmentally-friendly cars.
In her Budget speech, Reeves said: ‘Labour wants to support the take-up of electric cars,’ which in turn has now led to much higher rates of First Year Rate VEDs on any car that’s not zero emissions.
You can find out how much a particular car costs to tax using Parkers’ car tax checker.
What are the First Year Rates from April 2025?
The new First Year Rates are as follows and are confirmed to come into force from 1 April 2025:
- Zero emission cars will pay the lowest rate at £10 until 2029-30.
- Rates for cars emitting 1-50 g/km of CO2, including hybrid vehicles, will increase to £110 for 2025-2026.
- Rates for cars emitting 51-75 g/km of CO2, including hybrid vehicles, will increase to £130 for 2025-2026.
- All other rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025-2026.
Will new car buyers notice much of a difference?
This is quite a drastic change from before. Previously zero emission vehicles enjoyed free First Year Rates, so a ten-quid rise does show that the EV free-ride is now a thing of the past.
Low-emission cars (including plug-in hybrids) will face a substantial price rise. Cars in the 1-50g/km of CO2 band used to pay £10, and now face a sizeable jump of £100 to £110. It’s the same jump for 51-76g/km of CO2 cars too, up from £30 to £130. This is a strong indication from the government that they’re backing EVs and any emission-producing vehicle will be taxed more heavily going forward.
Cars that produce more than 76g/km of CO2 will the bear the heaviest brunt of increased costs. Every car in these bands will have the VED doubled from April 2025m meaning everything from the tiny Hyundai i10 to a decadent Rolls Royce Phantom will have their tax bill skyrocket. Note that first-year VED charges are usually included in the monthly payment of car leasing deals but not for financing.
First Year VED Rates for Cars Registered After April 1, 2025
Here’s a breakdown of the First Year VED rates for vehicles registered from April 2025 onward, this is the biggest shake up to VED in a long time:
| CO2 (g/km) | Diesel cars (TC49) that meet RDE2 standard and petrol cars (TC48) | All other diesel cars (TC49) | Alternative fuel cars (TC59) |
| 0 | £10 | £10 | £10 |
| 1- 50 | £110 | £110 | £110 |
| 51 – 75 | £130 | £130 | £130 |
| 76 – 90 | £270 | £350 | £250 |
| 91 – 100 | £350 | £390 | £330 |
| 101 – 110 | £390 | £440 | £370 |
| 111 – 130 | £440 | £540 | £420 |
| 131 – 150 | £540 | £1,360 | £520 |
| 151 – 170 | £1,360 | £2,190 | £1,340 |
| 171 – 190 | £2,190 | £3,300 | £2,170 |
| 191 – 255 | £3,300 | £4,680 | £3,280 |
| 226 – 255 | £4,680 | £5,490 | £4,660 |
| Over 255 | £5,490 | £5,490 | £5,490 |
What about existing cars?
If you’re not buying a new vehicle, you can breathe easier. The Chancellor confirmed that VED for existing cars will rise in line with the Retail Price Index (RPI). The rate as of April 2025 will be £195 for cars produced from 2017 onwards.
Rates from the second year onwards
From the second year onwards, all vehicles will fall into the same price band, regardless of fuel type:
| Fuel Type | Single 12-Month Payment | Total 12 Monthly Payments | Single 6-Month Payment |
|---|---|---|---|
| All Fuel Types | £195 | £204.75 | £102.38 |
Cars costing more than £40,000 attract VED car tax surcharge
Vehicles that cost more than £40,000 when new (including options) incur an extra annual charge of £425 (increasing from £410) on top of the standard annual VED car tax rates, from their first through sixth birthdays.
Cars that cost more than £40,000 new (including options) incur an extra charge of £425 for five years, starting when the car is taxed for the second time. This means you’ll be out of pocket to the tune of £2,125 in extra tax by the time the car turns six. The full charges are shown below.
| Fuel type | Single 12 month payment/by Direct Debit | Total of 12 monthly payments by Direct Debit | Single 6 month payment/by Direct Debit |
| All fuel types | £620 | £651 | £325.50 |
When the charge was introduced in 2017 it was largely only high-end, premium-brand cars that attracted it. However, recent inflation in new car prices means that many more mainstream models are liable for it, including the Volkswagen ID.5 or a top-spec electric Vauxhall Astra with some options.
It’s even easier to get caught out when buying a used car. That’s because it’s often not clear what a car cost when it was new, especially as the £40,000 threshold takes the price of any optional extras into account. And most online car tax calculators don’t indicate if a particular car will incur the extra charge. Often the only way to find out is by starting the process of paying for road tax on the government’s website.
Classic Car Tax Exemption
Cars that are over 40 years old are exempt from VED. For example, cars built in 1985 will be exempt starting in 2025, and those from 1986 will be exempt in 2026, and so on. Owners must apply for this exemption.
Car tax FAQs
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Where can I tax my car?
Most people get their car tax direct from the ‘tax your vehicle’ section of the UK government website. It’s easiest if you can enter the reference number from your road tax reminder letter, otherwise you’ll have to enter a few details about your car for the system to find it. Either way, it’s a quick and easy process. At the payment stage, you can buy either six or 12 months tax and choose to spread the cost with monthly payments, or pay in a lump sum.
You can also still pay for road tax at your local Post Office. You’ll need to take your car’s V5C registration document, plus the MoT and insurance certificates to prove the car is legal. You don’t get a paper tax disc to show for the transaction anymore, but at least you’re interacting with another person. -
How do I check my car tax?
You can do this at the ‘check if a vehicle is taxed’ section of Government website. Just enter your car’s registration – or that of any other car, for that matter – and you’ll be shown when its tax expires. The website also shows when the car’s MoT expires – MoT history is shown separately at the ‘check the MoT history of a vehicle’ web page.
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How do I cancel my car’s UK road tax?
Car tax is no longer transferrable between owners. When you move your car on to a new keeper – or it leaves your possession for any reason – you need to cancel the tax when you inform the DVLA that it has changed hands. If you paid in full, you’ll be refunded for any remaining full months of tax. Direct Debit payments are cancelled automatically, so you’ll have to set up a new one when you get your next car.
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How do you SORN a car?
It often happens that you may not be able to drive your car for a while. Perhaps it needs lengthy repairs, or you’re going travelling, or you’re just not able to drive. In those cases, you can put a statutory off-road notice (SORN) on your car, so you don’t have to pay road tax for the duration of that period. Parkers has a full guide on how to SORN your car.
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If I buy a car, can the dealer tax it for me?
A dealer can still tax a car on your behalf online, over the phone or at a Post Office. To do so, they’ll need your name and address, and a code number from the New Keep Supplement part of the car’s V5C registration document. However, taxing the car is ultimately your responsibility, so make sure the dealer provides proof that they’ve sorted it out. Alternatively, you can always take care of it yourself.
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Do I get a tax refund when I sell a car?
Road tax used to be transferrable between a car’s owners but that’s no longer the case. If you move your car on to a new owner – or scrap it – you need to cancel the tax. If you pay by Direct Debit, that’s done automatically when you inform of the DVLA of the new owner’s details. Either way, any remaining full months of tax will be refunded. So, if you paid for 12 months road tax and sell the car three months into that period, you’ll receive a refund equivalent to nine months of road tax. Refunds are paid to the bank account details the DVLA has on record for you, so make sure they’re up to date.
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Does paying for road rax by monthly Direct Debit cost more?
You can pay for road tax by Direct Debits taken out of your bank account every month. However, doing so adds to the cost. Pay monthly for 12 months tax and the cost goes up from £195 to £204.75 for a car registered after 1 April 2017. Costs vary between different cars, which you can read about earlier in this article. Paying for six months by Direct Debit is actually cheaper than making a one-off payment. But paying for 12 months in one lump sum is the most cost-effective option.
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Do I still get road tax reminders?
The DVLA no longer sends out road tax renewal reminders by post, just by text or email via the gov.uk website, so the onus is on you to keep on top of this. Your tax renews automatically annually, as long as your car is insured and has a current MoT (unless it’s exempt from testing – a car that’s 40 years or older, and registered ‘Historic’). You can, however, check your car’s road tax expiry date online.
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