'Mixed messages' over new car tax rules set to cost drivers over £1,000

11 March 2024 , 13:08

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New car tax bands announced and some drivers will pay 'three times more' (Image: No credit)

New car tax bands have been announced and some drivers could end up paying "three times more".

The changes, which are set to come into effect next year, have been criticised for sending "send mixed messages" to UK drivers who are being encouraged to switch to electric vehicles (EVs). Despite calls for the new rule to be scrapped, electric cars will start paying Vehicle Excise Duty from 2025.

Matthew Walters, who works at ALD Automotive | LeasePlan UK, has voiced his concerns about the decision. He said: "From April 2025, VED rates will be equalised across all cars, while new registrations priced over £40,000 will also qualify for the expensive car supplement a £410 charge, applied to the first five annual renewals."

"In some cases, this will mean drivers are paying three times more tax than they would for an equivalent petrol or diesel car, adding over £1,000 to a three-year lease contract. It sends mixed messages to drivers at a time when the Government is trying to encourage them to switch to battery power."

New zero-emission cars registered on or after 1 April 2025 will have to pay the lowest first-year rate of VED (which applies to vehicles with CO2 emissions 1 to 50g/km) currently £10 a year. From the second year of registration onwards, they will move to the standard rate, currently £180 a year, reports Birmingham Live.

Car tax to rise from April in bad news for drivers - how much more you will pay

The Department for Transport previously said: "Removing the VED exemption from April 2025 will marginally reduce the incentive to switch to electric vehicles, but the impact should be minimal given the marginal cost of VED compared to the overall cost of a vehicle."

And they further commented: "The government has also announced the continuation of incentives for electric vehicles through company car tax, which will likely continue to be effective in incentivising EV take up, and investment in chargepoint infrastructure."

James Rodger