New car tax changes which came into effect earlier this week will “make cars more expensive to own”, according to experts. Vehicle Excise Duty (VED) fees went up for almost all petrol, diesel and electric car owners from April 1, 2025.
Many of the increases were in line with Retail Price Index (RPI) inflation although the introduction of electric car, hybrid and first-year VED prices are new for 2025. Andy Wood, International Tax Expert at Tax Natives has suggested the new fees will dramatically increase the cost of ownership. Electric cars are likely to feel the impact of the changes having previously been completely exempt from VED fees up until now.
However, Andy stresses the news may actually be good for EVs which are now likely to be cheaper than petrol and diesel models.
Andy said: “Although electric vehicle owners are still benefiting from the shift towards cleaner vehicles, the end of the VED exemption will make these cars more expensive to own.
“However, the costs are still relatively lower compared to traditional petrol or diesel cars, making EVs a better option for many drivers in the long term.”
Brand new electric car owners pay just £10 in the first-year on the roads, considerably lower than combustion models.
Some of the most polluting petrol and diesel cars emitting over 255g/km of CO2 will be charged up to £5,490 in year one.
Meanwhile, electric cars registered after 2017 will be moved onto the standard VED charge which now sits at £195 per annum.
At the same time, many older petrol and diesel cars are charged VED based on emissions, with some fees up to £760 per year.
However, experts have raised concerns the new Expensive Car Supplement (ECS) fee could come back to bite electric car owners.
This is an additional £425 fee issued to vehicles with a list price over £40,000, payable over a five-year spell between year two and year six.
Tax Natives warns this may bring total EV bills up to £620, which could be a major concern for cash-strapped road users.
Motoring experts at DriveElectric previously predicted the new tax rules would not have too much of an impact on electric vehicles.
They commented: “While VED will be introduced for EVs, they still offer lower running costs, tax benefits, and environmental advantages compared to traditional petrol or diesel vehicles.”
