DVLA 'alters' car tax structure meaning drivers face £600 rise in VED

DVLA 'alters' car tax structure meaning drivers face £600 rise in VED
-Credit: (Image: Reach Publishing Services Limited)


Drivers could see car tax increase by £600 thanks to new bands from the DVLA which are attempting to "alter" the structure. Electric vehicle owners face impending tax hikes set to take effect on April 1, 2025, the DVLA has explained.

These changes could see many motorists face an annual tax bill increase of £600 to drive in the UK. EV drivers will pay £190 - the standard rate - but if they have more expensive cars of £40,000 or more, then they also face a £410 surcharge.

Andy Wood from Tax Natives said: "Starting in 2025, all electric vehicles priced over £40,000 will incur a new surcharge, fundamentally altering the current tax structure." The DVLA detailed: "For new electric vehicles with a list price exceeding £40,000, you will now need to pay the expensive car supplement from the second tax payment onwards. This applies to vehicles registered on or after April 1, 2025."

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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."

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