With the passing of the Budgets in 2022 and 2023, the Chancellor has announced an increase in car tax rates, also known as vehicle excise duty (VED), starting from 2025. These changes can have a significant impact on your running costs as a car owner, prompting some to consider selling their vehicles sooner rather than later to avoid potential financial strain.
Identifying Your Tax Band
To understand how these changes may affect you, it’s crucial to know which group your vehicle belongs to in terms of tax banding. This will help you determine your current rate and what to expect in the future. One way to find this information is by checking your vehicle’s V5C logbook, which indicates the year it was first registered. This information determines your tax band based on the emissions your car produces. If you’re unable to locate your registration year or your car’s emissions easily, consider running a free check online. Please note that alternative fuel vehicles, including hybrids, bioethanol, and liquid petroleum gas (LPG), fall under a separate category in all tax band tables.
Cars Registered Before March 1, 2001
For cars first registered prior to March 1, 2001, the tax rate is determined solely by engine size. There are only two tiers for cars falling under this category. The current rate for engines up to 1549cc is £200.00 per year, while engines over 1549cc are charged at £325.00 per year.
Cars Registered Between March 1, 2001, and March 31, 2017
Older cars registered between 2001 and 2017 are subject to a standard VED rate based on their emissions, with varying banding and pricing. In 2025, the first car tax band within this group will be eliminated, resulting in all cars emitting fewer than 110g/km paying the current petrol and diesel rate of £20 in VED per year. It’s important to note that these rates are subject to change, potentially leading to more significant adjustments in running costs for drivers of cars registered during this period.
Cars Registered Between April 1, 2017, and March 31, 2025
Cars that were newly registered in the last six years and those registered over the next year and a half currently adhere to specific VED rates. However, come April 1, 2025, cars within this category will experience changes in their tax rates. Zero-emission vehicles will now be required to pay a standard rate of £180 annually in VED, and they will also be subject to the expensive car supplement where applicable. Additionally, it’s possible that the current first-year tax rates across all emissions levels may undergo modifications in the future.
Cars Registered on or After April 1, 2025
Starting from April 1, 2025, VED rates for all newly registered cars will be simplified into two categories for the first year of tax, transitioning to a standard category from the second year onwards. Electric vehicles (EVs) will now be obligated to pay the expensive car supplement, a tax that was previously exempt for them. Drivers must be aware of this supplement, which applies to vehicles whose list price exceeded £40,000, and is payable from the second to the seventh tax year of ownership, regardless of any transfers or sales within that period.
Navigating Increased Running Costs
While drivers of much older cars may not experience significant cost increases with the upcoming road tax changes in 2025, those with EVs and newer, low-emission vehicles will face notable hikes in their running expenses. If you find it challenging to keep up with these escalating costs or believe they could impact your vehicle’s saleability in the future, it might be worth exploring your options for selling your car sooner rather than later. Platforms like Motorway offer free, instant valuations based on current market data, enabling you to assess your car’s worth accurately and efficiently.
By entering your vehicle registration on the Motorway website or app, you can receive a quick valuation based on a few straightforward questions about your car and the required photos. This process can be completed from your phone in just a few minutes. Should you decide to proceed with selling your car through an online daily sale, you can expect to receive your best offer in as little as 24 hours. The dealer will arrange for the free collection of your vehicle, and the payment will be swiftly and securely transferred to your bank account.
In Conclusion
As car tax rates continue to evolve and increase, it’s essential for car owners to stay informed about how these changes may impact their running costs. By identifying your vehicle’s tax band and understanding the upcoming adjustments in VED rates, you can make informed decisions about managing your finances and potentially selling your car to avoid unforeseen expenses. Platforms like Motorway provide convenient solutions for assessing your car’s value and facilitating its sale efficiently, ensuring a seamless process for both buyers and sellers in the ever-changing landscape of car taxation.