The Impact of the VED Price Rise
The VED price rise will affect approximately 11 million drivers in the UK, with the average annual cost increasing by £50. This represents a 4.5% increase, which is the largest rise in VED charges since 2010. The price hike is attributed to the government’s decision to increase the rate of the VED band for petrol and diesel vehicles.
How the Price Rise Will Affect Petrol and Diesel Owners
The price rise will apply to all petrol and diesel vehicles, including cars, vans, and motorcycles. The increase will be based on the vehicle’s emissions, with higher-emitting vehicles facing the largest price hikes. Petrol and diesel owners will need to pay the new VED rate from April, with the exact amount depending on the vehicle’s emissions and the band it falls into. ### The End of Exemptions for Electric Vehicles*
The End of Exemptions for Electric Vehicles
Motorists with electric vehicles will no longer be exempt from VED charges from April. The exemption, which was introduced in 2018, allowed electric vehicle owners to avoid paying VED for the first three years of ownership. The end of the exemption means that electric vehicle owners will need to pay the standard VED rate, which will be higher than the rate for petrol and diesel vehicles. ### What You Need to Do*
What You Need to Do
Petrol and diesel owners will need to check their vehicle’s emissions and band to determine the new VED rate. Electric vehicle owners will need to pay the standard VED rate from April. Motorists can check the new VED rates on the GOV.UK website or consult with a tax professional.
From 2026, the charge will increase to £140 per year.
The End of Exemptions for Electric Vehicles
The UK government has announced a significant change in the taxation of electric vehicles (EVs) from 1 April 2025. As of this date, newly registered EVs will no longer be exempt from Vehicle Excise Duty (VED), a tax levied on all vehicles in the UK. This change will have a substantial impact on the industry, affecting both manufacturers and consumers.
The Current Situation
Currently, electric vehicles are exempt from VED, which is a major factor in their popularity.
The government has also announced that it will introduce a new tax on electric vehicles, which will be charged at the same rate as the standard rate of vehicle tax. This new tax will be charged on the vehicle’s CO2 emissions, and will be based on the vehicle’s CO2 emissions per mile driven.
The VED Fee for Electric Vehicles: A New Tax on the Road
Introduction
The UK government has introduced a new tax on electric vehicles, which will come into effect from 1 April 2025. This new tax, known as the Vehicle Excise Duty (VED) fee, will be charged on registered keepers of electric cars.
The Luxury Electric Vehicle Conundrum
The UK government’s plan to tax electric vehicles (EVs) at £40,000 could have unintended consequences, according to industry experts. The proposed tax rate is intended to discourage the purchase of high-end EVs, but some argue that it does not accurately reflect the luxury nature of these vehicles.
The Problem with the £40,000 Threshold
The £40,000 threshold is based on the assumption that all electric vehicles are equivalent in terms of luxury and performance. However, luxury EVs, such as the Tesla Model S and the Porsche Taycan, are often priced above £40, These vehicles offer advanced features, premium materials, and exceptional performance, making them truly unique and luxurious. By setting the tax threshold at £40,000, the government may inadvertently encourage the purchase of more affordable EVs, rather than the high-end models that are truly representative of the luxury market. ### The Impact on the Luxury EV Market
The Impact on the Luxury EV Market
If the £40,000 threshold is not adjusted, it could lead to a decline in sales of luxury EVs. This, in turn, could result in a loss of market share for manufacturers that produce high-end EVs. The luxury EV market is a significant contributor to the overall EV market, and a decline in sales could have a negative impact on the industry as a whole.
