1 April 2025, UK motorists face a significant increase in Vehicle Excise Duty (VED) on high-emission vehicles, with some models seeing a tax hike of up to £2,745 in the first year. This change, announced in the UK government’s Autumn Budget, is part of broader efforts to reduce carbon emissions and encourage the adoption of electric vehicles (EVs).
Why Is the Tax Increasing?
The UK government is tightening its tax policies on high-emission petrol and diesel vehicles to meet its carbon reduction targets. The updated VED structure will impose higher charges on vehicles that produce over 255g/km of CO₂ emissions, nearly doubling the first-year tax rate for many popular models.
Under the new policy:
- First-year VED for vehicles emitting over 255g/km CO₂ will increase from £2,745 to £5,490.
- Some high-performance and luxury vehicles will be the most affected.
- Electric Vehicles (EVs) will also be subject to VED for the first time.
The changes aim to incentivize cleaner transportation options, aligning with the UK’s net-zero emissions by 2050 strategy. The UK government has already committed to banning the sale of new petrol and diesel cars by 2035, pushing for greater adoption of EVs (UK Government Transport Strategy).
Which Cars Are Affected?
A total of 59 popular car models from 24 manufacturers will be impacted by this tax hike. Among them are performance, luxury, and large-engine vehicles. Some of the most notable models facing the steepest increases include:
- Audi RS6 4.0 TFSI V8
- Ford Mustang 5.0 V8
- Lamborghini Urus 4.0 V8 Bi Turbo
- Porsche 911 3.7T 992 Turbo
- Range Rover 4.4 P530 V8
These vehicles already incur high road taxes due to their emissions, but from April, owners will have to pay significantly more upfront.
How Will Electric Vehicles Be Affected?
Previously exempt, electric vehicles (EVs) will now be subject to VED. The new tax structure includes:
- First-year VED: EVs will now pay a £10 fee in the first year.
- Standard annual tax: From the second year onwards, EVs will be charged £195 annually.
- Luxury EV surcharge: Vehicles costing over £40,000 will face an “expensive car supplement” of £425 per year for five years.
This means that even popular electric models, such as the Tesla Model S and Porsche Taycan, will become more expensive to own due to the new tax.
These measures have been met with mixed reactions, as EV adoption has been a priority for the UK government. Some industry experts argue that taxing EVs at this stage could discourage drivers from making the switch, while others believe it’s a necessary step toward a fairer taxation system (Department for Transport).
Why Is the Government Introducing These Changes?
The UK government is making these changes for several reasons:
- Revenue Generation – As EV adoption grows, fuel duty revenue is declining. Taxing EVs helps compensate for lost tax income from petrol and diesel sales.
- Encouraging Low-Emission Choices – Higher costs for high-emission vehicles push consumers toward greener alternatives.
- Aligning with Environmental Goals – The UK aims to cut emissions by 68% by 2030 and reach net-zero by 2050 (UK Net Zero Strategy).
The changes are also part of a broader road tax overhaul, which aims to future-proof the system for a world where electric and hybrid vehicles dominate the roads.
What This Means for Car Buyers
For anyone planning to buy a new car in 2025, these tax changes could significantly impact costs. High-performance and luxury car buyers will need to factor in the higher upfront VED charges, while EV buyers must now account for new annual taxation costs.
Car owners should consider these options:
- Opt for lower-emission petrol or hybrid models to avoid the highest tax rates.
- Explore electric vehicle incentives before they are phased out.
- Plan ahead for increasing motoring costs, especially if purchasing a high-end vehicle.
Final Thoughts
The upcoming changes to VED will see some of the UK’s most popular petrol and diesel models hit with significant tax hikes. While the government’s intention is to push drivers towards cleaner transportation, the inclusion of EVs in taxation raises questions about the future of road tax policy.
For motorists, the key takeaway is clear: check your car’s emissions before buying and be aware of the financial implications from April 2025.
Pankaj Kumar is a journalist at Chandigarh X, covering admit cards, recruitment, and government schemes. His articles provide readers with detailed insights into application processes, eligibility, and exam updates.
Outside of work, Pankaj enjoys traveling, fitness, and cricket, often participating in local matches on weekends.