Drivers warned over new £195 charge from April which comes as 'standard'
Major changes to car tax in April under the Labour Party government mean drivers face new charges from this month.
Drivers face "potentially slowing sales" over a "standard" new charge of £195 they will have to pay annually. Major changes to car tax in April under the Labour Party government mean drivers face new charges from this month.
James Hosking, Managing Director of AA Cars, said: "From April 1, 2025, electric and low-emission cars registered for the first time will pay a £10 vehicle tax in their first year, then the standard £195 annually.
“Those priced over £40,000 will also incur an extra luxury car tax for five years. Increased Vehicle Excise Duty (VED) for petrol and diesel cars may further impact the market, potentially slowing sales.
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"Meanwhile, proposed tariffs on car imports from the U.S. and rising manufacturing costs could add further pressure to new car prices, making affordability an increasing concern for buyers.”
Richard Evans, webuyanycar head of technical services, said: “Despite the changes and increases across the board, EV drivers will still have the most favourable road tax rates from April 2025. The £10 showroom tax for new EV buyers is small compared to the rates for low and higher-emission models.
“Once the changes take effect, owners of EVs first registered before April 2017 will have the cheapest annual road tax rate of all at just £20. This makes older EVs an attractive option for budget used car buyers looking to save on running costs. Meanwhile, road tax rates for cars producing over 76 g/km of CO2 are set to double.
“So, if you buy a new luxury or performance car in the highest emissions band from April 1st, you’ll face a £5,490 first-year road tax bill. Therefore, if ownership costs are a concern, it pays to opt for a greener motor.”
Plus Accounting previously said: “Extending the “expensive car supplement” to electric vehicles will significantly impact demand.
“From April 2025, EVs with a list price above £40,000 will incur an additional VED of £425 annually for five years, starting from the second year of ownership.
“This is in addition to the standard VED rates. Industry experts argue that the £40,000 threshold does not reflect luxury for EVs due to their generally higher costs than petrol or diesel cars.”