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From April 1st, Vehicle Excise Duty (VED) rates (sometimes known as the road fund licence) will change, affecting all drivers in the UK. 

Battery Electric Vehicles (BEVs) and first-year VED rates will see prominent changes, but hybrid, petrol and diesel car owners will also be affected.  We hope this summary of the changes is helpful. 

New Cars - First Year VED Rates Increase  

A brand new car’s VED is based on emissions. BEVs registered after April 1st 2025 will now pay first-year VED for the first time, while petrol, hybrid and RDE2-compliant diesels will also see changes depending on their emissions. 

BEVs - Cars registered on or after April 1st 2025, will pay the first year VED for the first time at £10 until 2029-30  

All cars emitting between 1-50 g/km of CO2, which will include most plug-in hybrids (PHEVs), will see their first year VED bill rise to £110. Currently, hybrids in this band pay zero VED in the first year, while petrol and diesel cars pay £10.  

New cars emitting between 51-75g/km of CO2 will increase their VED rates from £30 (or £20 for hybrids) to £135.  

All other VED rates will double next year:

1-50g/km – £110 (previously £10)  

51-75g/km – £130 (previously £30)  

76-90g/km – £270 (previously £135)  

91-100g/km – £350 (previously £175)  

101-110g/km – £390 (previously £195)  

111-130g/km – £440 (previously £220)  

131-150g/km – £540 (previously £270)  

151-170g/km – £1360 (previously £680)  

171-190g/km – £2190 (previously £1095)  

191-225g/km – £3300 (previously £1650)  

226-255g/km – £4680 (previously £2340)  

255+g/km – £5490 (previously £2475) 

The expensive car supplement, currently paid on all petrol and diesel cars costing over £40K when new, rises from £410 to £425 and will be extended to all cars, including EVs registered on or after April 1st 2025. It is paid in addition to standard VED each year from the second to the sixth year a car is registered on the road  

Battery Electric Vehicles (BEVs) – note, cars and vans are different  

BEVs - Cars registered between April 1st 2017, and 31 March 2025 will pay the standard VED of £195 from April 1st 2025  

BEVs - Cars registered between March 1st 2001 and March 30th 2017 will now pay £20 VED a year  

Electric vans will now be charged £355 VED each year – the same rate as petrol and diesel light goods vehicles 

Standard VED Rates - all cars registered after April 1st 2017 

The standard VED rate of £195 applies to all cars registered after April 1st 2017, from their second year onwards. Previously, it was £190 for petrol/diesel cars, with a £10 discount for hybrids and free for electric cars. 

VED rates for cars registered between March 1st 2001, and March 31st  2017 - VED is based on fuel type and CO2 emissions. 

Cars registered between March 1st 2001, and March 31st 2017, are sorted into thirteen emission-based bands for VED.  

The most prominent change from April 1st is that cars with CO2 emissions of 0-100g/km will now pay £20 per year (previously, it was free). The rest of the bands have increased by between £5 and £25 or stayed the same, with the highest band for cars emitting over 255g/km now rising to £760. 

Cars and light goods vehicles registered before March 1st  2001 – VED is based on engine size 

Vehicle Excise Duty (VED) - Rates From April 1st 2025

All company car drivers are liable to Benefit-in-Kind (BiK) taxation. The Autumn Budget saw an announcement that the levels of this liability would change for all car types. These changes come into effect on April 6th, 2025 (the new tax year). 

BiK is calculated based on three criteria: 

The income tax band of the person getting the company car 

The P11D value of the car, which includes a car’s quoted list price plus all options/extras and delivery charges. It excludes road tax, first registration fees, and any dealer price discounting. If the car in question is second-hand, the P11D value still relates to its new value 

BiK percentage rate - take into account a car’s CO2 emissions, so the lowest polluting cars attract less tax, relative to more polluting ones of similar P11D value, and these are about to change 

Together, these three figures create the following formula: 

P11D value (£s) x BiK rate (%) x Income tax band (%) = Annual BiK tax payable 

From April 6th 2025, BiK rates will increase. All cars that emit less than 160g/km of CO2, including electric and hybrid cars, will get a 1% BiK rate increase. However, Plug-in hybrids (PHEVs) could see higher increases with a focus on their CO2 emissions rather than including zero-emission mileage, aligning them more closely with rates for internal combustion engine (ICE) vehicles. 

The CO2 emissions testing procedure for PHEVs is set to become much stricter, potentially pushing them into a higher BiK bracket.  All new PHEV models launched from January 1st, 2025, will be subject to the new testing rules, while existing models must be retested by December 31st, 2025, to remain compliant.  

Looking further ahead, the realignment of PHEVS with ICE cars is evident, and this move will significantly impact plug-in hybrid company car drivers. The appropriate percentage rates for vehicles that produce 1g to 50g CO2 per kilometre and can also operate on electric power within a certain range will be amended.  

Vehicles with CO2 emissions of 1g to 50g per kilometre will have appropriate percentages of 18% in 2028/29 and 19% in 2029/30. A PHEV capable of up to 69 miles of zero-emission driving will see a seven-percentage-point year-on-year increase in BIK. 

News - March 2025

Vehicle Excise Duty (VED) - Rates From April 1st 2025

Changes to Benefit-in-Kind From April 6th 2025

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