The recent hike in Vehicle Excise Duty (VED), or car tax, has impacted many UK drivers. However, there’s a silver lining for some motorists.
As of April 1, 2025, electric vehicle owners are required to pay VED for the first time. Annual standard rate charges have also increased for petrol and diesel cars. Electric, zero, or low-emission vehicles registered on or after April 1, 2025, will be subject to the lowest first-year vehicle tax rate, set at £10.
From the second tax payment onwards, the standard rate of £195 will apply, which is now also applicable to such vehicles registered between April 1, 2017, and March 31, 2025.
Vehicles of these types registered between March 1, 2001, and March 31, 2017, have been moved to the first band, with a VED value of £20. Additionally, the £10 annual discount for hybrid and AFVs will be abolished, and the rate drivers will pay will depend on when the vehicle was first registered.
If the vehicle was:
registered before 1 April 2017 – this rate will depend on the vehicle’s CO2 emissions (check the current rates for these vehicles)
registered on or after 1 April 2017 – you will pay the standard rate (this will be £195)
Most electric vans will transition to the standard annual rate for light goods vehicles. Electric motorcycles and tricycles will move to the annual rate for the smallest engine size.
Moreover, new electric and zero-emission vehicles registered from April 1, 2025, with a list price over £40,000, will be subject to the standard rate, plus an additional expensive car supplement for the first five years starting from the second licence.
However, one category of drivers can still benefit from tax-free roads. From April 1, 2025, vehicles manufactured before January 1, 1985, are now eligible for historic vehicle status, which exempts them from Vehicle Excise Duty (VED).
But it’s not as straightforward as simply not taxing the vehicle – certain procedures must be followed.
Mark Wilkinson, managing director at Heritage Car Insurance, explained: “Historic vehicles are cars, vans and motorcycles that are at least 40 years old and classified as such by the DVLA. Once a vehicle is officially registered as historic, you no longer need to pay vehicle tax (VED). This exemption applies from the start of the financial year after your car’s 40th birthday.
“As of April 1, 2025, a car built before January 1, 1985, qualifies for this historic vehicle exemption. It’s crucial for motorists to remember that they must still go through the process of taxing their vehicle with the DVLA.”
