Car tax is changing, with some fees rising by more than £2,000 for UK drivers. But how will it affect you.
The sweeping UK car tax changes come into force on 1st April 2025 and are aimed at generating much-needed funding for the Treasury.
The main changes come in the form of vehicle excise duty (VED) or road tax, with new and electric vehicles (EVs) finding themselves the main target. So, what’s changing?
What Do the Car Tax Changes in 2025 Mean for You?
Some of these changes were confirmed by the previous government and the last Budget, while others are brand new. If you’ve missed any of it, we don’t blame you – it’s confusing. But we’re here to help.
The car tax changes for 2025 may seem complicated, so we’ve broken them down so you can see exactly how much you’ll be paying. Let’s take a look…
If You’re Buying a New Petrol or Diesel Car
- From 1st April 2025, new petrol and diesel cars will be expected to pay their first year of tax based on CO2 emissions.
- After the first year of registration, these vehicles will be expected to pay what is known as the ‘standard rate’, a £195 flat rate.
- Vehicles costing more than £40,000 are considered ‘luxury vehicles’ and will face an additional charge of £425 per year for the first two to six years.
First-year tax emission bands are as follows:
| G/km of CO2 | New tax band | Old tax band | Approximate model |
| 0 | £10 | £0 | EV |
| 1-50 | £110 | £10 | Plug-in hybrid |
| 51-75 | £130 | £30 | Petrol hybrid |
| 76-90 | £270 | £135 | |
| 91-100 | £350 | £175 | Larger SUV hybrids |
| 101-110 | £390 | £195 | |
| 111-130 | £440 | £220 | Small to medium petrol/diesel |
| 131-150 | £540 | £270 | |
| 151-170 | £1,360 | £680 | Mid/larger SUVs, pickups, minivans – petrol/diesel |
| 171-190 | £2,190 | £1,095 | |
| 191-225 | £3,300 | £1,650 | |
| 226-255 | £4,680 | £2,340 | Light vans |
| 255+ | £5,490 | £2,475 | Heavy vehicles |
For example, this means that if you’re buying a new Land Rover Defender 3.0 D300 X-Dynamic HSE 90 3dr Auto you’ll be expected to pay £3,300 in your first year – that’s a staggering £1,650 more than before.
If You’re Buying a New EV
Until now, EV owners have been exempt from charges because of their lower emissions, but with the new road tax changes for 2025, this is about to change. So, what’s new?
- EVs registered after 1st April 2025 will be charged the first-year rate of £10.
- In their second year and onwards, EV owners will have to pay the standard rate of £195.
- EVs registered between 1st April 2017 and 31st March 2025 will now have to pay the same standard rate of car tax, £195 a year.
- Just like their petrol and diesel counterparts, EVs will face a new ‘luxury car tax’ of £420 per year for two to six years for vehicles with an RRP of more than £40,000.
That means if you wanted to buy a brand new BYD SEAL U Estate 1.5 DM-i Comfort 5dr PHEV Auto, you’d be paying first-year rate of £10, then the standard rate of £195 for subsequent years.
If You’re Driving an Older Petrol or Diesel Car
While there are some significant changes for new cars and EVs, existing petrol and diesel drivers won’t be getting away lightly. So, what’s changing?
- From 1st April 2025, cars registered between 1st March 2001 and 31st March 2017 will need to pay according to their new banding, which is based on emissions.
The new bandings are as follows:
| G/km of CO2 | New tax band | Old tax band | Approximate model |
| Up to 100 | £20 | £0 | Small to medium petrol/diesel cars |
| 101-110 | £20 | £20 | |
| 111-120 | £35 | £35 | |
| 121-130 | £165 | £160 | |
| 131-140 | £195 | £190 | |
| 141-150 | £215 | £210 | |
| 151-165 | £265 | £255 | |
| 166-175 | £315 | £305 |
Larger luxury cars, mid/larger SUVs |
| 176-185 | £345 | £335 | |
| 186-200 | £395 | £385 | |
| 201-225 | £430 | £415 | |
| 226-255 | £735 | £710 | Large pickups/vans |
| 255+ | £760 | £735 | Light/heavy vans |
Have These New Car Tax Changes Turned a Corner?
With these new road tax changes for 2025, the government is making drivers bear a heavy burden, but will this be too much? Will these costs change the motoring landscape and how people enjoy new cars?
One thing is clear: it’s getting a lot more expensive for everyday people to buy and enjoy a new car more frequently because new cars now mean big taxes. It’s why more and more people are turning to more flexible and affordable ways to drive a new car.
Short-term leasing and car subscriptions now offer car lovers the ability to drive new cars more often because they don’t come with the inflated prices of owning a brand-new model.
Need More Information on Flexible and Affordable Car Leasing?
For first-timers, short-term leasing can seem like a complicated process, but at Flexed, we’re here to help you avoid the aches and pains of searching for the best deal. We’re here to give you simple, flexible, and affordable car leasing so you can drive a car you love.
To find out more about our car leasing services and offers for both business and personal use, email or give us a call on 0800 311 8290.
