Experts are calling on drivers to take action within the next four months or they could see themselves slapped with a massive car tax bill.
From April 1, 2025, new Vehicle Excise Duty (VED) rules will be introduced that will see electric cars pay tax for the first time to create a “fairer system” for all drivers.
This was first announced by former Chancellor Jeremy Hunt under the previous Conservative administration in the 2022 Autumn Statement, despite criticism from the industry.
It will see the removal of band A under the existing VED system and will see EVs pay the lowest first year rate of vehicle tax.
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Experts are calling on drivers to make a decision before car taxes are hiked in 2025
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For those registered on or after April 1, 2025, this will cost £10, followed by a standard rate payment of £195 from the second tax payment onwards.
Owners of electric, zero or low emission cars registered between April 1, 2017, and March 31, 2025, will pay the £195 standard rate, while a £20 rate will apply to vehicles registered between March 1, 2001, and March 31, 2017.
Any newly purchased electric vehicle costing more than £40,000 will also have to pay the Expensive Car Supplement.
The luxury car tax costs £410 every year for five years, which will cost a total of £2,050, starting from the vehicle’s second year of registration.
Speaking to GB News, Stuart Masson, editorial director at The Car Expert, said: “For most buyers, this tax won’t make a huge difference.
“But for some, it could significantly affect affordability. If you’re in a position to act, buying before 1 April could save you a couple of thousand pounds in tax on a new EV.”
As announced in this year’s Autumn Budget, the Government will make further changes to “widen the differentials” between the amount paid by owners of zero emission vehicles and those who own petrol and diesel vehicles.
Speaking during the Budget, Chancellor Rachel Reeves said: “Madame Deputy Speaker, we want to support the take-up of electric vehicles.
“So I will maintain incentives for electric vehicles in Company Car Tax from 2028 and increase the differential between fully electric and other vehicles in the first year rates of Vehicle Excise Duty from April 2025.”
Masson also highlighted the importance of car buyers shopping around for the best deals, especially if they are looking to buy new electric vehicle models.
Estimates from the Society of Motor Manufacturers and Traders (SMMT) suggest that major car brands discounted the list price of electric vehicles by around £4billion in 2024 alone.
Many experts have hinted that this trend could continue in the coming year as manufacturers look to meet Zero Emission Vehicle mandate targets to sell electric cars or face hefty fines.
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Masson added: “In the first year of the new ZEV mandate, we’ve seen some car manufacturers offering huge discounts to help them hit targets at the end of the year.
“We expect them to manage their stock better next year, so there are more likely to be good deals all year long.”
