From April, drivers of new petrol, diesel, and hybrid vehicles will face higher first-year tax rates.
The first-year Vehicle Excise Duty (VED) for cars is calculated based on their CO2 emissions. Currently, electric vehicles (EVs) do not incur any VED charges. Cars emitting between 111g and 150g/km pay £220, while those emitting more than 255g/km pay £2,745 for their first year. However, starting in April, buyers of electric vehicles will pay £10 for their first year’s VED, with this rate now frozen.
In contrast, first-year VED rates for petrol, diesel, and hybrid vehicles will increase significantly, with most rates doubling. For instance, any car emitting between 1-50g/km of CO2 will see the first-year VED rise from £10 to £110, and vehicles in the 51-75g/km range will see their rate increase from £30 to £130. Cars emitting more than 75g/km will see their first-year rate double.
Older electric vehicles, specifically those registered between 2017 and 2024, will begin paying £195 annually from April, while those registered before 2017 will pay £20 per year.
However, the government has hinted that this could be introduced for electric vehicles in a future “fiscal event.”
As an example, a new Ford Puma driver will see their first-year VED rise from £220 to £440, while the first-year VED for a Range Rover could increase from £2,745 to £5,490.
Chancellor Rachel Reeves announced these changes in her October Budget, stating, “To help drive the transition to electric vehicles, the government is strengthening incentives to purchase EVs by widening the differentials in VED first-year rates between electric vehicles and hybrids or internal combustion engine cars. We are also maintaining electric vehicle incentives in the company car tax regime and extending 100% first-year allowances for zero-emission cars and electric vehicle charge points for a further year.”
