The UK’s road tax system is undergoing a significant transformation in 2025, and it’s set to impact millions of drivers—particularly older motorists. The latest Vehicle Excise Duty (VED) changes, introduced by the UK Government, are designed to promote the adoption of low-emission vehicles. However, for older drivers, many of whom rely on traditional petrol or diesel cars, the reforms could bring substantial financial consequences.
Whether you’re considering buying a new vehicle or simply trying to understand how these changes will affect your current one, this comprehensive guide will break down everything you need to know.
What Are the Major Car Tax Changes Coming Into Effect From April 2025?
From 1 April 2025, one of the most significant overhauls to car tax in recent years will come into force. The changes follow the UK Government’s commitment to transition toward greener, zero-emission vehicles and to reflect the environmental impact of car ownership more accurately in taxation.
The major updates include:
- A doubling of the first-year VED (often called “showroom tax”) for most new petrol, diesel, and hybrid vehicles.
- Electric vehicles (EVs), previously exempt from road tax, will now be subject to a first-year VED and standard annual charge.
- The standard rate of VED for all vehicles will increase in line with the Retail Price Index (RPI), which reflects inflation.
These updates will impact both new and existing car owners across the UK, although new vehicle buyers will feel the pinch most immediately due to steep first-year rates.
Why Are Older Drivers Likely to Be Most Affected by These Tax Increases?
Older drivers, particularly those in the baby boomer generation, are expected to be disproportionately affected by the 2025 VED changes. According to recent research by Go.Compare, older motorists are more likely to drive vehicles that are several years old, many of which are higher-polluting petrol or diesel cars. These types of vehicles now attract higher VED rates under the updated tax regime.
Additionally, only 6% of baby boomers currently drive a hybrid or fully electric vehicle. This lack of uptake means they are less likely to benefit from the lower VED rates offered to zero-emission cars. In contrast, younger generations are adopting greener cars at a faster rate, thereby reducing their tax liabilities.
Go.Compare estimates that this demographic shift alone will result in baby boomers paying an additional £40.5 million in car tax from April 2025 onwards.
The older generation is also less likely to change vehicles frequently. Therefore, the long-term ownership of high-emission vehicles means sustained higher tax bills in the coming years.
How Much Will Drivers Pay in First-year VED Under the New Rules?
The 2025 VED changes have dramatically revised the first-year tax bands, particularly penalising high-emission vehicles. The new “showroom tax” will see drivers paying anywhere from £10 to £5,490 depending on the CO2 emissions of their vehicle.
What Are the First-year VED Rates by CO2 Emissions for New Cars?
| CO2 Emissions (g/km) | First-Year VED (2025) | Previous Rate | Increase |
|---|---|---|---|
| 0 | £10 | £0 | +£10 |
| 1–50 | £110 | £10 | +£100 |
| 51–75 | £130 | £30 | +£100 |
| 76–90 | £270 | £135 | +£135 |
| 91–100 | £350 | £175 | +£175 |
| 101–110 | £390 | £195 | +£195 |
| 111–130 | £440 | £220 | +£220 |
| 131–150 | £540 | £270 | +£270 |
| 151–170 | £1,360 | £680 | +£680 |
| 171–190 | £2,190 | £1,095 | +£1,095 |
| 191–225 | £3,300 | £1,650 | +£1,650 |
| 226–255 | £4,680 | £2,340 | +£2,340 |
| Over 255 | £5,490 | £2,745 | +£2,745 |
For example, a low-emission plug-in hybrid might incur a first-year charge of £110, while a petrol SUV with emissions over 255g/km will attract the maximum rate of £5,490.
Even relatively efficient vehicles haven’t been spared. The popular Toyota Yaris Hybrid, emitting just 91g/km CO2, will now cost £350 to tax in the first year—a rise from £165. Similarly, the Nissan Qashqai Mild Hybrid, which produces 144g/km CO2, will be taxed at £540 in the first year, double its previous rate.
Luxury vehicles and performance cars will feel the most dramatic increases. A Range Rover with 194g/km CO2 emissions will now carry a £3,300 showroom tax bill. And a BMW M4, known for its power and performance, will attract a charge of £4,680 in its first year.
These figures signal a major financial deterrent for those buying vehicles that contribute more to pollution.
What Will Electric Vehicle Owners Be Required to Pay From 2025?
Up to now, EV owners have enjoyed full exemption from paying VED. But this is set to change. Starting in April 2025, EVs registered after 1 April will be required to pay £10 in their first year and £195 annually thereafter equal to the standard rate for other types of vehicles.
Furthermore, EVs with a list price exceeding £40,000 will also be subject to the Luxury Car Supplement, a £425 annual charge applicable from year two to year six of ownership. This brings the total to £620 per year for high-end EVs.
While this marks the end of a generous policy for EV adopters, the government argues that it levels the playing field, especially as the market share of EVs continues to grow.
How Are Older Vehicles Taxed if They Were Registered Before 2017?
Cars registered before 1 April 2017 are taxed under a different system, one based on CO2 emissions (for vehicles registered after 1 March 2001) or engine size (for those registered before that date).
For cars registered between 2001 and 2017, VED is split into 13 tax bands (A to M). For example:
- A car emitting up to 100g/km CO2 falls into Band A and now costs £20 per year.
- Cars emitting over 255g/km CO2 fall into Band M, taxed at £760 per year.
Vehicles registered before 1 March 2001 are taxed based on engine displacement:
- Below 1549cc: £220 annually
- Above 1549cc: £360 annually
This group includes many vehicles still owned by older drivers who purchased their cars over a decade ago and have retained them due to reliability or preference.
How Are Plug-in Hybrids and Mild Hybrids Taxed Differently in 2025?
In the 2025 system, hybrid vehicles no longer receive special treatment. Instead, they are now taxed in line with conventional petrol or diesel vehicles based on their CO2 output.
Plug-in hybrids, which typically emit between 1–50g/km, now face a first-year VED of £110. Those in the 51–75g/km range pay £130. Although these rates are lower than traditional combustion engine vehicles, they’re still a significant increase compared to prior exemptions.
Mild hybrids, which emit more CO2 and offer limited electric support, fall into the same tax structure as comparable petrol models. For instance, a mild hybrid emitting 101–110g/km now incurs a £390 first-year tax, up from £195.
These changes make it crucial for buyers to compare emissions ratings closely when considering hybrid options.
How Does the DVLA Track Unpaid or Expired Car Tax in 2025?
The traditional paper tax disc may be obsolete, but enforcement of VED has never been tighter. The DVLA uses Automatic Number Plate Recognition (ANPR) technology to detect untaxed vehicles.
ANPR cameras are mounted on roads and police vehicles and are cross-referenced with DVLA records. If your vehicle shows up as untaxed, enforcement is swift:
- A Late Licensing Penalty letter (LLP) is issued, with an £80 fine (reduced to £40 if paid quickly).
- If ignored, the vehicle may be clamped, impounded, and even crushed.
- Reclaiming an impounded vehicle can cost over £200, plus £21 per day in storage fees.
Driving without tax is also an offence that can lead to court action, with potential fines of up to £1,000 or five times the owed tax.
What Can Older Motorists Do to Prepare for These Tax Changes?
With tax changes hitting harder than ever, especially for owners of older cars, preparation is key. Many motorists are unaware of their vehicle’s CO2 emissions, let alone their tax band. A recent survey revealed that 83% of drivers don’t know their car’s emissions figure.
Older drivers should take the following steps:
- Use the GOV.UK tax checker to determine your vehicle’s current and future VED.
- Consult your V5C logbook, which contains your vehicle’s CO2 emissions and registration details.
- If your car is high-emission, consider switching to a lower-emission vehicle or an EV before the new rates take effect.
- Factor in VED costs when budgeting for vehicle upgrades or replacements.
Who Qualifies for Car Tax Exemptions Under the 2025 Rules?
Some categories of vehicles and owners are still exempt from paying VED, even under the new rules. These include:
- Vehicles used by disabled individuals
- Historic vehicles (those over 40 years old from the start of the current year)
- Electric scooters, powered wheelchairs, and invalid carriages
- Agricultural, horticultural, and forestry vehicles
- Steam-powered vehicles
Note that even exempt vehicles must still be “taxed” (i.e., registered with the DVLA) even if no payment is due.
FAQ about 2025 car tax changes
What is Vehicle Excise Duty (VED) and how is it calculated?
VED is a UK tax for using a vehicle on public roads, calculated based on CO2 emissions, fuel type, and registration date.
Are hybrid vehicles still eligible for road tax discounts in 2025?
No. Hybrids are now taxed like any other car based on emissions, with no specific discounts available.
How can I find my car’s CO2 emissions for tax band purposes?
Check the V5C logbook or enter your registration number on the DVLA’s vehicle information page.
Will the new VED changes affect insurance premiums?
Not directly, but rising total ownership costs may influence insurance choices or market values.
What happens to car tax if I sell my vehicle this year?
Remaining VED is refunded to the seller; the new owner must re-tax the vehicle before use.
What are the fines for failing to pay my road tax on time?
Initial penalties start at £80 but can rise dramatically. Vehicles may also be clamped or seized.
Can I legally drive without paying VED in 2025?
No. All vehicles on public roads must be taxed, and enforcement is automated and strict.
