Car Tax Changes In 2025

👉 What Is Car Tax?
👉 How Does Car Tax Work?
👉 What Car Tax Changes Are Coming In 2025?
👉 What Are Electric Car Tax Rates?
👉 How Much Will My Car Tax Be In 2025?
👉 Conclusion

What Is Car Tax?

Car tax is a yearly tax that drivers must pay to use the UK roads. If you fail to tax your vehicle and are spotted by police, you will likely face fines and could even have your vehicle clamped. Any car tax payments you make will go towards road work and maintenance, ensuring your tax goes to a worthy cause. Learn more about car tax by visiting our dedicated page here.

How Does Car Tax Work?

Not all cars are taxed the same. How much a car is taxed depends on things like its size, emissions, age and engine type. The two main factors that determine car tax are emissions and age. In the case of emissions, higher polluting cars are charged a larger tax to try and put people off owning high-polluting cars. In some cases, an electric vehicle didn’t need to be taxed, in a bid to attract more people to drive cleaner.

In terms of age, cars are taxed differently based on when they were registered:

• Cars older than 40 years don’t need to be taxed.
• Cars registered before 1 March 2001 will be taxed on engine size.
• Cars registered between 1 March 2001 and 1 April 2017 are taxed based on the emissions of the car.
• Cars registered on or after 1 April 2017 will see the first-year rate based on CO2 emissions, followed by a yearly rate.
• Electric vehicles don’t require drivers to pay car tax currently, however, this is changing in 2025.

What Car Tax Changes Are Coming In 2025?

There’s plenty of change on its way. Where electric vehicles have traditionally received a tax break, this is set to no longer be the case. As of 1 April 2025, electric and low-emission vehicle drivers will now have to pay taxes the same way as drivers of petrol and diesel vehicles. Even vehicles that are currently not being taxed could now face payment requirements moving forward. All current tax rates are subject to change in 2025 but are all likely to increase in future.

What Are Electric Car Tax Rates?

Originally electric cars weren’t taxed, a major draw for people to switch to greener cars. From 2025 onwards, electric cars will be taxed like normal cars, a change from past years. Although guidelines could still change, it is expected that in your first year of EV ownership, you will pay around £10 road tax, followed by £190 from your second year onwards. However, if you opt for a luxury EV (one that’s valued from £40,000 upwards), you will pay considerably higher tax rates. With a luxury EV, you can expect to pay £410 per year from the second to fifth year of ownership.

How Much Will My Car Tax Be In 2025?

Car taxes are set to rise across the board, but to find your specific car tax for 2025, take a look at this free car tax calculator. The standard rate for cars from the second year of registration onwards will be £190.

Conclusion

Car tax rates are set to increase no matter what car you drive. This change is felt especially in the EV space and could put people off an EV purchase in future. With this tax hike felt across the board, there’s not much you can do to save on car tax... let’s just hope they use the extra crash to fix all the potholes!

Don’t let future car tax put you off a new ride. Marsh Finance has over 75,000 cars available via our car marketplace, with finance available on all options. Interested in new wheels, explore financing options today!