Starting on 1st April 2025, the UK government will implement significant changes to Vehicle Excise Duty (VED) for new cars, affecting both electric and internal combustion engine (ICE) vehicles.
First-Year VED Rates:
Electric Vehicles (EVs): New EVs will incur a first-year VED of £10, a slight increase from the previous £0. From the second year onwards, they will be subject to the standard annual rate of £195.
Internal Combustion Engine (ICE) and Hybrid Vehicles: First-year VED rates for these vehicles will see substantial increases:
New vs Old VED Rates:
| CO2 Emissions | New VED Rate | Previous VED Rate |
| 0g/km CO2 | £10 | £0 |
| 1–50g/km CO₂ | £110 | £10 |
| 51–75g/km CO₂ | £130 | £30 |
| 76–90g/km CO₂ | £270 | £135 |
| 91–100g/km CO₂ | £350 | £175 |
| 101–110g/km CO₂ | £390 | £195 |
| 111–130g/km CO₂ | £440 | £220 |
| 131–150g/km CO₂ | £540 | £270 |
| 151–170g/km CO₂ | £1,360 | £680 |
| 171–190g/km CO₂ | £2,190 | £1,095 |
| 191–225g/km CO₂ | £3,300 | £1,650 |
| 226–255g/km CO₂ | £4,680 | £2,340 |
| Over 255g/km CO₂ | £5,490 | £2,475 |
Standard Annual VED Rates:
All Vehicles Registered After 1st April 2017: The standard annual VED rate will increase to £195, up from £190.
Expensive Car Supplement: Vehicles with a list price over £40,000 will incur an additional £425 per year from the second to the sixth year of registration.
How the Expensive Car Supplement Works (from April 1st, 2025)
The Expensive Car Supplement is an additional tax applied to vehicles with a list price exceeding £40,000, introduced as part of the 2025 VED changes.
This measure affects all vehicle types, including electric vehicles, which were previously exempt from such extra charges. Owners of these premium cars will pay an extra £425 per year for five years—starting from the second year of registration—on top of the standard annual VED of £195.
- Applies to cars with a list price over £40,000 at first registration.
- Charge: £425 per year.
- Duration: Paid annually for five years from the second year after registration.
- On top of standard VED: This means owners of expensive EVs will pay the £195 standard VED plus the £425 supplement, totalling £620 per year.
Impact on Electric Vehicles:
While EVs will now contribute to VED, the first-year rate remains minimal at £10, and the standard annual rate will be set at £195. However, EVs with a list price exceeding £40,000 will be subject to the £425 Expensive Car Supplement from the second year onwards.