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3 days ago · This tax information and impact note is about increases to the Vehicle Excise Duty rates for cars, vans and motorcycles by Retail Price Index in 2025 to 2026.
- First-year Vehicle Excise Duty rates for cars from 1 April 2025
General description of the measure. Vehicle Excise Duty...
- First-year Vehicle Excise Duty rates for cars from 1 April 2025
- Who is likely to be affected
- General description of the measure
- Policy objective
- Background to the measure
- Detailed proposal
- Summary of impacts
- Monitoring and evaluation
- Further advice
Owners of cars, vans, motorcycles, and holders of motorcycle trade licences.
This measure will uprate the Vehicle Excise Duty (VED) rates for cars, vans, motorcycles and motorcycle trade licences by the Retail Prices Index (RPI). This is a standard uprating to come into effect from 1 April 2024.
Increasing VED rates by RPI in tax year 2024 to 2025 will ensure that VED receipts are maintained in real terms and that motorists make a fair contribution to the public finances.
This measure was announced at Autumn Statement 2023.
VED is a tax on vehicles used or kept on public roads and rates depend on the vehicle type, its characteristics such as emissions and its date of first registration. VED rates have increased in line with inflation since 2010.
Operative date
The measure will have effect on and after 1 April 2024 for all cars, vans, motorcycles and motorcycle trade licences.
Current law
Section 1 of the Vehicle and Registration Act (VERA) 1994 provides for the charging of VED. Section 2 of VERA 1994 provides that VED in respect of a vehicle of any description is chargeable by reference to the applicable rate specified in Schedule 1 to VERA 1994.
Proposed revisions
Legislation will be introduced in Autumn Finance Bill 2023 to amend the applicable rates for cars, vans, motorcycles and motorcycle trade licences specified in Schedule 1 to VERA 1994. Full details of the new rates are given in Annex A to the Overview of Tax Legislation and Rates.
Exchequer impact (£ million)
This measure is not expected to have an Exchequer impact.
Economic impact
The measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will impact on motorists owning a car, van or motorcycle or using a motorcycle trade licence. The increase in VED rates is in line with RPI meaning rates will remain unchanged in real terms for vehicle owners. The measure is not expected to impact on family formation, stability or breakdown. Customer experience is expected to remain broadly the same as this measure does not make any changes to the operation of the tax.
This measure will be monitored through the DVLA vehicle licensing data, as well as through regular communication with relevant stakeholders across government and in industry.
If you have any questions about this change, contact the Energy and Transport Taxes Team by email at: ETTAnswers@HMTreasury.gov.uk
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If your new car has a list price of more than £40,000, you’ll pay an additional rate or premium car tax. In financial year 2024-25, this premium tax is £410. This kicks in when you pay your second lot of VED (i.e. after the first year is complete) and is payable on top of the standard rate of VED.
- Andrew Woodhouse
3 days ago · General description of the measure. Vehicle Excise Duty first-year rates are paid for the first year of a car’s lifecycle, at the point of registration, and vary based on emissions. From 1 April ...
3 days ago · Road Tax (VED) First year Vehicle Excise Duty (VED) rates for new cars have been overhauled, with significant rises for certain vehicles from 1st April 2025. According to the Government, the measures have been designed to “strengthen incentives to purchase zero emission and electric cars” by “widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars.
Apr 2, 2024 · On 1 April 2024, the latest set of changes to road tax for new cars came into force. This saw the existing VED band structure adjusted for inflation once again.
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Jul 25, 2024 · The Chancellor of the Exchequer confirmed that the increase in the 2025 VED car tax rates would be part of the Spring Budget for 2024. Under the previous tax system, petrol and diesel vehicles were charged a flat rate of £180, which has now been adjusted to £190.
