New VED car tax bands from DVLA means £600 warning for petrol and diesel drivers
Petrol and diesel drivers who are contemplating switching to electric motors have been warned they could be hit with a £600 VED charge from next year. Car tax bands could see EV drivers - who drive more expensive motors worth over £40,000 - hit with a £410 surcharge on top of the standard £190 flat rate, which they face paying for the first time in 2025.
Former Conservative Party Chancellor Jeremy Hunt confirrmed the changes to DVLA car tax earlier this year. Andy Wood, motoring expert at Tax Natives, explained: "Starting in 2025, all electric vehicles priced over £40,000 will incur a new surcharge, fundamentally altering the current tax structure.
"Currently, many EVs benefit from a zero-rated Vehicle Excise Duty (VED), aimed at encouraging greener transport options. However, rising car prices mean a substantial number of models now fall into the luxury tax category, defined by a price exceeding £40,000."
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He continued: "The new tax framework indicates that any electric or low-emission vehicle registered after April 1 2025 wil incur the lowest first-year rate of vehicle tax, applicable to those with CO2 emissions between 1 and 50g/km.
"After the first payment, these vehicles will transition to a standard annual rate of £190, though this may change in 2025." David Lewis, Head of Electric Vehicles & Energy at Select Car Leasing, described the move for EVs to pay VED as disappointing, but inevitable.
“It was always inevitable that EV owners would one day have to pay vehicle excise duty or a similar tax so this doesn’t come as a great surprise,” said Lewis. “Road tax generates billions for the Treasury each year – and as more and more people move to EVs, that’s a large fiscal gap to plug. In my view EV road tax has been brought in at least two, three years ahead of time, as a reaction to a challenging financial outlook.”