2025 Vehicle Excise Duty Explained: New Costs for Petrol, Diesel, and EVs

In a significant shift for UK motorists, Vehicle Excise Duty (VED) rates are set to change from April 1, 2025.

These adjustments aim to promote the adoption of zero-emission vehicles and reflect the government's commitment to environmental sustainability.

First-Year Rates for New Vehicles

The first-year VED, commonly known as the "showroom tax," is determined by a vehicle's CO₂ emissions. From April 2025, these rates will be:

• 0 g/km CO₂ (Electric Vehicles): £10
• 1–50 g/km CO₂: £110
• 51–75 g/km CO₂: £130
• 76–90 g/km CO₂: £270
• 91–100 g/km CO₂: £350
• 101–110 g/km CO₂: £390
• 111–130 g/km CO₂: £440
• 131–150 g/km CO₂: £540
• 151–170 g/km CO₂: £1,360
• 171–190 g/km CO₂: £2,190
• 191–225 g/km CO₂: £3,300
• 226–255 g/km CO₂: £4,680
• Over 255 g/km CO₂: £5,490

These rates represent a doubling for higher-emission vehicles compared to previous years, intensifying the financial incentive to choose lower-emission options.

Standard Rates for Subsequent Years

After the first year, a standard VED rate applies:

• Electric Vehicles: £195 annually
• Petrol and Diesel Vehicles: £195 annually
• Alternative Fuel Vehicles (e.g., Hybrids): £195 annually

Notably, the £10 annual discount for alternative fuel vehicles will be discontinued.

Expensive car supplement

Vehicles with a list price exceeding £40,000 will incur an additional charge of £425 per year from the second to the sixth year of registration. This supplement now includes electric vehicles, a change that has sparked debate given the typically higher costs of EVs.

Implications for motorists

These VED adjustments are designed to encourage the adoption of low-emission vehicles by making high-emission options less financially attractive. However, the inclusion of electric vehicles in both the standard rate and expensive car supplement has raised concerns about potential disincentives for EV adoption.

As the April 2025 implementation date approaches, motorists are being advised to consider these changes when buying new, as VED will play an increasingly significant element of the total cost of ownership.

The ethical choice

The ETA was established in 1990 as an ethical provider of green, reliable travel services. Over 30 years on, we continue to offer cycle insurance , breakdown cover  and mobility scooter insurance while putting concern for the environment at the heart of all we do.

The Good Shopping Guide judges us to be the UK's most ethical provider.

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