DVLA car tax 2025 warning. Find out if you'll be hit by a £600 tax blow
26/09/24
An important update on vehicle tax has been issued by the DVLA, potentially leaving millions of drivers facing a steep £600 fee. In a communication today, the agency highlighted that from April 2025, all electric and low-emission vehicles will be subject to new taxation rules.
When does it come into affect?
Starting 1 April 2025, owners of electric and low-emission cars, vans, and motorcycles will have to pay vehicle tax in the same manner as those driving petrol and diesel vehicles. This new policy will impact both newly registered and existing vehicles, with cars valued over £40,000—more than half of registered vehicles—facing an additional surcharge.
Historically, owners of eco-friendly vehicles enjoyed the benefit of being in tax band A, with a zero-rated Vehicle Excise Duty (VED) to encourage the adoption of green transportation. However, a recent post on X disclosed the DVLA's upcoming changes: "Vehicle tax is changing for electric and low emission vehicles from 1 April 2025."
Electric and low-emission vehicles registered on or after 1 April 2025 will have to pay the lowest first-year vehicle tax rate, which applies to vehicles with CO2 emissions between 1 and 50g/km. From the second year onwards, these vehicles will be subject to the standard rate of tax, which is currently set at £190 for 2024, but may rise in 2025.
Vehicles with a market price exceeding £40,000 will also incur a £410 surcharge, pushing the total yearly tax to £600. It’s estimated that more than half of new electric vehicles surpass this price threshold.
The total road tax for any vehicle priced over £40,000 will remain £600 annually until the vehicle reaches six years of age. This figure includes the cost of optional extras and is based on the manufacturer’s official list price, not the amount paid by the customer.
For instance, a vehicle priced at £39,000 with an additional £2,000 in extras will be subject to the luxury vehicle tax, whereas the same car without optional features would not.
What car models does this expensive car supplement apply to?
Due to rising car prices, largely driven by inflation, the Expensive Car Supplement now applies to many models that are not traditionally seen as luxury vehicles. Even higher-end versions of popular models like the Vauxhall Astra, Ford Kuga, and Volkswagen Golf are impacted. In 2023, the average price of a new electric vehicle in the UK was £40,000, compared to £30,000 for an internal combustion engine vehicle.
The Expensive Car Supplement will not apply to electric vehicles registered before 1 April 2025, but any new EVs priced over £40,000 after that date will be subject to the tax as it currently stands.
For electric and low-emission cars registered between 1 April 2017 and 31 March 2025, the standard tax rate will be applied. This rate is £190 for 2024, though it may change for 2025.
Vehicles registered between 1 March 2001 and 31 March 2017 will shift to the first band with an assigned VED value, which is set at £20 for 2024, though this may increase in 2025.
Hybrid and alternatively fuelled vehicles (AFVs) will no longer receive a £10 discount. The rate for AFVs registered before 1 April 2017 will be based on their CO2 emissions, while those registered afterward will pay the standard rate of £190 for 2024, subject to potential changes in 2025.