New car tax rates with some drivers being forced to pay VED for 'first time'

Car tax changes will see the Treasury make £8billion next year from VED hikes with drivers footing the bill. The Driver and Vehicle Licensing Agency is expected to raise around £8billion in revenue from taxes in the next financial year.

The new tax year will see the Treasury recoup the cash from drivers who will be hit by rising rates, as well as electric vehicle motorists, who face having to fork out for VED for the first time ever.

The amount of money raised in VED revenue for the period 2022/23 was £7.3billion a 2.8 per cent increase from £7.1billion in 2021/22. In a warning to zero emission vehicles, the DVLA stated: “The Expensive Car Supplement exemption for Electric Vehicles will also be withdrawn.

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“The Office for Budget Responsibility forecasts that revenue will now continue rising from 2024/25 into 2027/28". Greg Wilson, founder and CEO of said: “These road tax charges will be affecting all current and future electric vehicle drivers.

“It’s important for anyone planning to buy a zero-emissions car to know what they will be expected to pay in less than a year’s time and factor these changes into their decision-making process.” Jeremy Hunt, the Conservative Party Chancellor, has spoken out over the changes.

He said: "To make our motoring tax system fairer, I’ve decided that electric vehicles will no longer be exempt from vehicle excise duty." And a tweet from the Treasury said the change would make sure ‘all motorists pay their fair share.’

RAC head of policy, Nicholas Lyes, said of the changes: "After many years of paying no car tax at all, it’s probably fair the Government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025. While vehicle excise duty rates are unlikely to be a defining reason for vehicle choice, we believe a first-year zero-VED rate benefit should have been retained as a partial incentive.

"But we don’t expect this tax change to have much of an effect on dampening the demand for electric vehicles given the many other cost benefits of running one."