Car tax hikes drive electric vehicle owners to pay for the first time

In the United Kingdom, significant changes to the Vehicle Excise Duty (VED) are set to take effect in April 2025. These updates will result in higher first-year tax rates for drivers of new petrol, diesel, and hybrid vehicles, aimed at encouraging a shift towards electric cars. Currently, many drivers remain unaware of these upcoming changes, with a poll indicating that up to 75 percent of drivers lack knowledge regarding the adjustments in VED regulations. Under the new structure, cars emitting 1-50g/km of CO2 will see their first-year tax rise from £10 to £110, while those in the 51-75g/km band will increase from £30 to £130. Notably, vehicles that emit more than 255g/km will have their tax rates doubled, significantly increasing the cost for owners of high-emission cars. For instance, owners of new petrol and diesel vehicles with emissions above 255g/km will now owe £5,490 as opposed to the current rate of £2,745. Additionally, this change will also affect electric vehicle owners who, for the first time, will be required to pay VED. This decision, initially announced by former Chancellor Jeremy Hunt, reflects the Office for Budget Responsibility's estimate that half of all new vehicles sold will be electric by 2025. Consequently, the government seeks to create a more equitable motoring tax system, as electric vehicle owners will be treated similarly to traditional petrol and diesel drivers. From the second year following a vehicle's registration, electric cars will incur a standard VED charge of £195. Furthermore, electric cars registered between April 2017 and March 2025 will also pay this same rate. Vehicles registered from March 2001 to April 2017 will have a reduced duty of just £20. This system aims to support the rapid transition toward electric vehicle usage while also raising an estimated £400 million per annum for the Treasury as part of the broader commitment to environmental sustainability.