From April 2024, the vehicle excise duty (VED), also known as road tax or car tax, for most new and used cars, except for the cleanest ones, will increase. This could be by as much as 6%, given the UK’s recent high inflation levels.

The increase is expected to range between £5 and £10. However, individuals who own new vehicles with the highest emissions will face a more significant rise of £140 in the first year. The initial car tax rate is determined by the amount of CO2 emissions produced by the vehicle. Starting from 1 April 2024, only fully electric vehicles will remain exempt from VED.

For petrol and diesel cars registered after 1st April 2017, there is a flat rate of £190 per year after the first year. Owners of alternative fuel vehicles, on the other hand, are required to pay £180 annually.

Vehicles priced at £40,000 or higher (including additional features) will incur an extra annual fee of £390 (increased from £355 in 2021/2022) for a duration of five years. This additional charge comes into effect after the initial year’s CO2-related fee, meaning you will be required to pay the supplement during the second to sixth year of owning the vehicle.

Changes in 2025

In 2025, EVs will no longer be exempt from VED. Instead, buyers of EVs will be required to pay the first-year rate at the next lowest level, which currently stands at £10. Following the initial year, EV owners will then have to pay the standard VED rate, currently set at £180. However, this standard rate is projected to increase to £190 by April 2024 and is anticipated to rise further in 2025.

Alternative fuel vehicles will no longer receive the £10 discount that is currently applicable to them for both initial and subsequent year fees. As a result, they will be subject to the same charges as cars powered by petrol and diesel engines.

In April 2020, the UK VED road tax system underwent significant changes. CO2 emissions calculations were revised to include WLTP carbon dioxide figures for the first time. Additionally, the supplement on electric cars valued over £40,000 was eliminated.

 

Find out more here – vehicle tax rates.