'Older car' drivers to be caught out by new 2025 car tax VED rise
Drivers with older cars could be caught out by the new 2025 car tax Vehicle Excise Duty (VED) rise set to come into place later this year.
VED rates will rise across the board in April with petrol and diesel owners most likely to be hit the hardest.
Higher rates will apply to standard VED fees with costs rising from £190 to £195 per annum. It's been reported by the Express that the first-year VED rates for the most polluting petrol and diesel cars will also rise with some set to pay up to £1,745 more. Older cars will not do not escape the tax hike. There will be sizeable charges for vehicles registered between 1985 and 2001.
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Andy Wood, international tax advisor at Tax Natives, said motorists relying on “older” cars will feel the sting. He said: “These changes come with financial challenges, especially for drivers and businesses relying on older or less efficient vehicles.”
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Drivers registered over the 16-year period pay VED fees based on the size of their engines with some increases coming in April.
According to specialists at Pete Barden, models which have an engine capacity of over 1,549cc will pay £345 over the 2025/26 tax year. This is up from the current £325.
Motorists with an engine size below 1,549cc will see a £10 increase with bills rising from £200 to £210. From April, cars registered before 1985 will be exempt from VED tax charges due to the historic vehicle exemption rules.
Meanwhile, vehicles built after 2001 are taxed under a different system which takes into account pollution rates and emissions.
The increase for older vehicles is a simple annual inflationary rise which hits VED rates every spring.
It means the Treasury is not expected to make any extra revenue from the increase even if motorists are affected by the rise.
HMRC explained: “This measure will uprate the Vehicle Excise Duty rates for cars (excluding first year rates) and all other rates for vans, motorcycles and motorcycle trade licences by the Retail Price Index, and will reflect the inclusion of zero-emission vehicles in Vehicle Excise Duty from 1 April 2025.
“This is a standard uprating to comes into effect from 1 April 2025.”
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