The major car tax rule change you need to know about starting next month

A shake-up is looming for owners of zero- and low-emissions vehicles

Major changes to vehicle excise duty (VED) are coming.

From April 1, the tax exemption for zero- and low-emissions vehicles will end.

Electric vehicles will also be liable for the expensive car supplement from the same date.

Concerns have been raised about the change, including that it will discourage people from choosing electric cars over conventionally fuelled models.

Here’s what you need to know, including the reasons behind the change and how much prices will rise for owners.

What is VED?

VED, often referred to as car tax, is a tax on the ownership of a vehicle.

How much is it?

Rates vary depending on the age of a vehicle and its CO2 emissions.

Can you give me some examples?

A new Volkswagen Golf R petrol model has a first year rate of £220, with subsequent years costing £190 annually.

Zero- and low-emission vehicles such as electric cars are exempt.

Vehicle excise duty changes kick in on April 1 (Getty Images/iStockphoto)

What is happening?

The exemption for zero- and low-emission vehicles will end.

When?

The overhaul comes into force on Tuesday April 1.

Why?

The policy was announced by then-chancellor Jeremy Hunt in November 2022 under the Conservative government.

At the time, he said he wanted to “make our motoring tax system fairer”.

What impact will this have?

EV owners will be charged VED of £10 for the first year after a vehicle is registered.

After that, there is a standard rate of £195 for every subsequent year of ownership.

What is the expensive car supplement?

Also known as the luxury car tax, this supplement affects vehicles with a list price in excess of £40,000.

It involves paying an annual supplement on top of the standard rate for years two to six after a vehicle is first registered.

From April 1, the amount will be £425 per year.

Why is this an issue for EVs?

New EVs registered from April 1 will be liable for the expensive car supplement.

What are the concerns about this in relation to the switch to electric motoring?

EVs tend to cost more than their equivalent petrol and diesel cars, so they are more likely to be affected by the expensive car supplement.

There are fears that this will put some people off from switching to electric cars and they will instead choose conventionally fuelled models.