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Incoming VED car tax rise for 2024/25 to strengthen the EV case

Road tax is expected to rise by more than £100 in the first year for some models, with further rises across the board

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If low charging costs, a smooth driving experience, low company car rates and zero tailpipe emissions weren’t enough to sell you on EVs, a new rise in car tax for petrol and diesel models now means going electric is more appealing than ever.

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HM Revenue and Customs (HMRC) has confirmed that in 2024, Vehicle Excise Duty (VED), also known as road tax, will rise in-line with the Retail Price Index’s (RPI) current rate of inflation. The result of this is that some drivers will end up incurring an additional £100 to their already-high tax bills.

Exact figures are yet to be confirmed, however, finance expert, Pete Barden, suggests that the base annual rate of road tax will rise from £180 to £190. That’s not all, as the ‘luxury’ car tax — which concerns vehicles costing more than £40,000 from new — is expected to also rise, meaning that it could cost well over £600 per year to tax a run-of-the-mill petrol family SUV.

Furthermore, the initial first-year VED tax rate, which is based on the tailpipe CO2 emissions of a particular vehicle, will see a rise almost across the board; the base rate of £10 will stay the same, but the most polluting of cars will now be liable to a £2,745 tax bill, compared to £2,605 in 2023. 

Of course, electric cars still escape all of these added costs; EVs and other zero-emissions vehicles (ZEVs) are exempt from road tax until April 2025, meaning EV owners will have a little more cash in their wallets for at least another year. From then on, we expect electric cars to incur the base rate of road tax, with top models potentially escaping the aforementioned ‘luxury’ surcharge.

Should EVs continue to be exempt from VED beyond 2025? Let us know on our social channels – X, Facebook and Threads!

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Hello there, I’m Tom Jervis and I have the pleasure of being the Content Editor here at DrivingElectric. Before joining the team in 2023, I spent my time reviewing cars and offering car buying tips and advice on DrivingElectric’s sister site, Carbuyer. I also continue to occasionally contribute to the AutoExpress magazine – another of DrivingElectric’s partner brands. In a past life, I worked for the BBC as a journalist and broadcast assistant for regional services in the east of England – constantly trying to find stories that related to cars!

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