VED Increase: What It Means and Why Now Is the Best Time to Buy a New Car

If you're planning on buying a new car, there's an important change coming that could impact how much you pay. From April 1st, 2025, the Vehicle Excise Duty (VED), commonly known as road tax, will increase, meaning higher costs for many drivers. But there’s still time to lock in the current lower rates by ordering your new car now!

What Is VED and Why Is It Increasing?

VED is a tax applied to most vehicles registered in the UK and is based on factors such as CO₂ emissions, fuel type and engine size. The UK government adjusts VED rates every April to account for inflation and to encourage the shift towards low-emission and electric vehicles. From April 1st, many petrol, diesel, hybrid and even some electric cars will see a significant increase in their first year and standard annual road tax rates. Electric vehicles, which have previously been exempt from VED, will soon be subject to these charges. As a result, many EV owners will face an increase in their running costs. The biggest impact will be felt by owners of higher-emission vehicles, but even lower-emission cars won’t escape the increase.

What Are the VED Changes in 2025? 

• New zero-emission vehicles registered from 1 April 2025: These cars will face a VED charge, starting at a reduced first-year rate of £10 until the 2029-30 tax year. After the first year, owners will need to pay the standard annual rate of £195.
• Zero-emission cars registered between 1 April 2017 and 31 March 2025: From 1 April 2025, these vehicles will be subject to the standard annual VED rate of £195.
• Zero and low-emission vehicles registered between 1 March 2001 and 30 March 2017: Cars previously in Band A will now move to Band B, meaning an annual charge of £20.
• First-year VED increases across all emission bands:
  • Vehicles emitting 1–50g/km CO2 (including hybrids) will see an increase to £110.
  • Those emitting 51–75g/km CO2 (including hybrids) will rise to £130.
  • Vehicles emitting 76g/km CO2 and above will experience a doubling of the current rates.
• Standard VED adjustments: From 1 April 2025, the government will adjust standard VED rates for cars, vans, and motorcycles, excluding first-year rates, in line with RPI.
• Expensive Car Supplement: Newly registered zero-emission vehicles with a list price exceeding £40,000 will now be subject to an additional annual charge of £410 for five years, starting from the second year. Previously, these cars were exempt.
• Zero-emission vans: Electric vans will now be taxed at the same rate as petrol and diesel light goods vehicles, which currently stands at £335 per year for most models.

How Will the VED Increase Affect You?

For those purchasing a new car after April 1st, 2025:

Starting 1 April 2025, existing electric vehicle owners will need to pay the standard VED rate of £195 per year.

For those registering a new electric car on or after 1 April 2025, the first-year VED will be £10, followed by an annual charge of £195 from the second year onwards. While zero-emission vehicles will now be subject to road tax, their rates remain considerably lower than those of higher-emission vehicles, with a reduced first-year fee as an added benefit.

Additionally, if a newly registered electric car has a list price of £40,000 or more, it will be subject to the Expensive Car Supplement. This means an extra £410 per year for five years, starting from the second year. Since EVs are generally priced higher than petrol or diesel models, selecting premium features or optional extras could easily push the price above the £40,000 threshold.

Why Now Is the Best Time to Order Your New Car?

With the April 1st deadline fast approaching, now is the time to act. If you order and register your new vehicle before the VED increase, you can:

• Lock in the current lower VED rates and avoid paying the higher tax for this year
• Save money on your new car purchase
• Take advantage of current dealer offers before manufacturers adjust their prices in response to the tax changes.

Don’t Wait! Beat the Price Increase Today!

At Perrys, we have a fantastic range of new cars in stock, ready for immediate delivery before the April deadline. Whether you’re looking for a petrol, diesel, hybrid or electric vehicle, our friendly team is here to help you find the perfect car.