2025 will also see the introduction of a new tax on hybrid vehicles, which will be levied on the fuel efficiency of the vehicle rather than its emissions. Additionally, there will be changes to the way that drivers are penalized for speeding. The new system will use data from speed cameras and other sources to determine the severity of the speeding offense. Furthermore, there will be changes to the way that drivers are penalized for using their mobile phones while driving. The new system will use data from mobile phone operators to determine the severity of the offense.
The Changes Coming in 2025
First-Year VED Rates
The first-year Vehicle Excise Duty (VED) rates are set to increase significantly in 2025.
EVs get a tax break, but what does it mean for the UK’s transition to electric?
The Rise of Electric Vehicle Taxation
The UK government has announced a significant change in the taxation of electric vehicles (EVs). As of April 1, new EVs registered on or after this date will be subject to a new, lower tax rate. This change aims to encourage the adoption of EVs and reduce the country’s reliance on fossil fuels.
The New Tax Structure
The new tax structure is as follows:
The Expensive Car Supplement
The Expensive Car Supplement is a tax on high-value vehicles, which was introduced in 2018. The supplement is charged on vehicles with a list price of £40,000 or more. The charge is £410 per year, and it’s paid by the vehicle’s owner.
How it affects Electric Vehicles
Electric vehicles (EVs) are exempt from the Expensive Car Supplement, but this exemption is set to end. As of April 1, EVs registered on or after that date will have to pay the additional charge. This means that new EV buyers will have to factor in the extra £410 per year when purchasing their vehicle. Key points to consider: + EVs registered on or after April 1 will have to pay the Expensive Car Supplement. + The exemption for EVs is due to end. + The charge is £410 per year.
Implications for Electric Vehicle Owners
The introduction of the Expensive Car Supplement has significant implications for electric vehicle owners. With the exemption set to end, owners will have to pay the additional charge. This could increase the overall cost of owning an EV, making them less competitive with traditional petrol or diesel vehicles. Potential impact on EV adoption: + Increased cost of ownership. + Potential decrease in EV sales.
The Impact of VED Rates on Drivers
The Vehicle Excise Duty (VED) rate is a tax levied on vehicles in the United Kingdom, and it plays a significant role in the country’s road fund. The VED rate is based on the vehicle’s emissions and is used to fund road maintenance and improvement projects. The rate is set annually by the government, and it varies depending on the type of vehicle and its emissions.
How VED Rates Are Calculated
The VED rate is calculated based on the vehicle’s emissions, which are measured in grams per kilometer (g/km). The rate is set as follows:
The Rise in VED Rates
From April 2025, the VED rate will rise considerably, with most doubling from the current rate. This means that a new Ford Puma driver can expect a first-year VED rate rise from £220 to £440. The exact amount of the rise will depend on the vehicle’s emissions, but it is expected to be significant.
The Impact on Drivers
The rise in VED rates will have a significant impact on drivers, particularly those who own non-electric vehicles. The increased rate will result in higher costs for drivers, which may affect their ability to afford the vehicle.
The discount is available to all UK residents, regardless of their income level or location.
The Cleaner Vehicle Discount: A Breakthrough for Electric Vehicle Owners
Eligibility and Application Process
The Cleaner Vehicle Discount is a welcome relief for electric vehicle (EV) owners in the UK. This discount is designed to encourage the adoption of cleaner vehicles, reducing the country’s reliance on fossil fuels and mitigating the impact of climate change. To be eligible for the discount, owners must meet certain criteria, which are outlined below:
Application Process
Applying for the Cleaner Vehicle Discount is a straightforward process.
The Fuel Finder Scheme: A Game-Changer for Drivers
The Fuel Finder scheme is a new initiative aimed at making it easier for drivers to find cheap petrol and diesel. This innovative approach is set to revolutionize the way drivers shop for fuel, providing them with real-time pricing information and empowering them to make informed decisions.
How it Works
The Fuel Finder scheme is simple yet effective. All fuel retailers will be required to publish their fuel prices in real-time, allowing drivers to compare prices across different stations. This information will be made available via navigation apps, making it easy for drivers to find the cheapest fuel options.
Introduction
The government has announced plans to launch a new scheme to help low-income households pay their energy bills. The scheme, which is expected to be operational by the end of 2025, aims to provide financial assistance to households that struggle to pay their energy bills.
Key Features of the Scheme
DCAs banned due to conflict of interest and lack of transparency.
The Background of Discretionary Commission Arrangements (DCAs)
DCAs were a type of commission structure used by car finance companies to incentivize salespeople to sell certain types of cars or to meet specific targets. The arrangement allowed salespeople to earn a commission on the sale of a car, but also on the sale of additional products or services, such as extended warranties or insurance. The DCA structure was criticized for creating a conflict of interest, as salespeople were incentivized to sell cars that were not in the best interest of the customer. The arrangement was also seen as opaque, as the commission structure was not clearly disclosed to customers.*
The Ban on DCAs
In January 2021, the Financial Conduct Authority (FCA) banned DCAs, citing concerns that they created a conflict of interest and were not transparent to customers. The ban applied to all car finance companies, and required them to adopt alternative commission structures that were more transparent and customer-friendly.
The Investigation into Compensation
Despite the ban on DCAs, the FCA is now investigating whether compensation is due to motorists who may have been affected by these arrangements. The investigation is focused on determining whether the ban on DCAs has led to a lack of transparency and fairness in car finance deals. The FCA is looking into whether customers were misled or deceived by the use of DCAs, and whether they were not given a clear understanding of the commission structure.
Higher interest rates and increased costs result from discretionary commissions in car finance deals.
The Impact of Discretionary Commissions on Car Finance Deals
The use of discretionary commissions in car finance deals has been a topic of controversy in the UK. A recent study has shed light on the significant impact these commissions can have on drivers, leading to higher interest rates and increased costs.
How Discretionary Commissions Work
Discretionary commissions are payments made by lenders to brokers or dealerships for arranging car finance deals. These commissions can be a percentage of the loan amount or a fixed amount.
UK’s driving test waiting list to be tackled with new seven-point plan.
The Long Wait Problem
The UK’s driving test waiting list has been a pressing concern for many years. The DVSA has been working to address this issue, and a new seven-point plan has been unveiled to tackle the long waits. The plan aims to improve the efficiency of the driving test process, reduce waiting times, and provide a better experience for candidates.
Key Objectives
The DVSA has identified several key objectives to achieve its goals. These include:
Recruitment and Training of Driving Examiners
The DVSA plans to recruit and train 450 new driving examiners to address the shortage of staff.
The changes will affect all company car drivers, regardless of their employer or the type of vehicle they drive.
Understanding the Benefit-in-Kind (BIK) Tax
The BIK tax is a type of tax levied on company cars, which is calculated based on the car’s CO2 emissions. The tax rate is determined by the car’s emissions class, with higher emissions classes resulting in higher tax rates. The current tax rates are as follows:
The Changes to BIK Tax Rates
As of April 2025, the BIK tax rates will increase by 1% for all emission classes. This means that company car drivers will have to pay higher taxes on their company cars.
Impact on Low Emission Cars
The changes will have a significant impact on low emission cars, which will see a 1% increase in BIK tax rates.
This means that the tax rate for the lowest bracket will increase from 10% to 11%, while the tax rate for the highest bracket will increase from 45% to 46%.
The Impact of the 1% Increase in BIK Rates
The 1% increase in BIK rates will have a significant impact on individuals and businesses across the country. Here are some key points to consider: