DVLA car tax warning as half new car drivers hit by £600 tax blow | Personal Finance | Finance

0
45


An urgent vehicle tax update has been announced by the DVLA, which could see millions of motorists facing a hefty £600 bill. In post today the agency flagged that come April 2025, all electric and low emission vehicles will be subject to new charges.

From 1 April 2025, drivers of electric and low emission cars, vans and motorcycles will need to pay vehicle tax in the same way as drivers of petrol and diesel vehicles. This change will apply to both new and existing vehicles – and anything over £40,000 – which is more than half of vehicles registered – is hit by a surcharge.

Previously, consumers getting a greener vehicle were in tax band A and enjoyed a zero-rated Vehicle Excise Duty (VED), effectively waiving road taxes in a bid to boost environmentally friendly transport options. However, a post today on X revealed the DVLA’s plans: “Vehicle tax is changing for electric and low emission vehicles from 1 April 2025.”

Electric and low emission cars registered on or after 1 April 2025 will need to pay the lowest first year rate of vehicle tax (which applies to vehicles with CO2 emissions 1 to 50g/km). From the second tax payment onwards, these vehicles will pay the standard rate. This is £190 for 2024 but is subject to change for 2025.

Drivers with models with a price tag topping £40,000 must brace for a £410 surcharge, soaring the total annual tax levy to a staggering £600 – and it’s estimated that more than half of new electric vehicles cost more than that.

The total road tax for any car costing over £40,000 is £600, paid annually until the vehicle is six years old. The £40,000 figure includes optional extras and is based on the manufacturer’s official list price, not the actual price paid by the customer.

Therefore, a car costing £39,000 with £2,000 of optional extras will attract the luxury car tax, while the same car without any options fitted will not.

Rapid inflation on car prices since the introduction of the Expensive Car Supplement means that this tax now applies to many models not seen as particularly luxurious, including higher-spec versions of mainstream models like the Vauxhall Astra, Ford Kuga and Volkswagen Golf. In 2023, the average price of a new electric vehicle (EV) in the UK was £40,000, compared to £30,000 for a new internal combustion engine (ICE) vehicle.

The Expensive Car Supplement does not apply to new electric cars registered before April 1, 2025, but after that date, new EVs costing over £40,000 will be liable to pay the tax, as it stands.

Electric and low-emission cars registered between 1 April 2017 and 31 March 2025 will pay the standard rate. This is £190 for 2024 but is subject to change for 2025.

Electric and low-emission cars registered between 1 March 2001 and 31 March 2017 will move to the first band that has a VED value. This is £20 for 2024 but is subject to change for 2025.

Hybrid and alternatively fuelled vehicles (AFVs) will no longer benefit from a £10 discount. The rate for vehicles registered before 1 April 2017 will be determined by their CO2 emissions.

For those registered on or after this date, the standard rate of £190 for 2024 will apply, although this may change in 2025.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here