THE FUTURE OF CAR TAX: WHAT YOU NEED TO KNOW ABOUT THE EXPENSIVE CAR SUPPLEMENT

As April 1st 2025 approaches, motorists are bracing themselves for a significant shift in how they pay for their cars. The introduction of a new "Expensive Car Supplement" will have far-reaching implications for drivers, and we're here to break down what you need to know.

From April this year, drivers who own high-value vehicles with a list price of £40,000 or more will be slapped with an additional annual fee. This supplement is designed to address the environmental impact of expensive cars, which tend to produce higher levels of emissions. However, there's a catch – electric vehicles will no longer be exempt from this new tax.

For many electric cars, this change won't have a significant impact. In fact, if you're in the market for a new car and can afford to pay £40,000 or more, it's likely that your annual car tax will be £410 dearer per year for five consecutive years, starting from the second VED payment made when your car is one year old. This means you'll need to factor in this extra cost when calculating your vehicle excise duty receipts.

Example:

• Hyundai IONIQ 5 N
• Powertrain: Electric
• List Price: £65,000
• CO2 Emissions: 0g/km

• 2024 VED (First Year): £0
• Subsequent Years: £0

• 2025 VED (First year): £10 Expensive Car Supplement
• Subsequent Years: £190 + £410 = £610

With this in mind, the clock is ticking to register your next EV before April 1^st 2025.

If you're considering purchasing a new car, it's essential to factor in the cost of vehicle tax when making your decision. The retail price plays a core role in determining which cars will fall under the expensive car supplement category. With many popular models already priced above £40,000, many electric cars will be affected by this new tax.

To avoid any confusion, it's crucial to keep an eye on the government's announcements and updates regarding vehicle excise duty rates.

EV’s are the future, we know that. Despite this, the age-old questions keep coming up. Do we need to worry about range anxiety? Will this new tax encourage more people to switch to electric vehicles? Only time will tell, but one thing is certain – the government's efforts to promote sustainable transport are a step in the right direction. With many charging points already available across public roads in the UK and Northern Ireland, it's easier than ever for drivers to make the switch.

As we count down to April 1st, 2025, it's essential to stay informed about these changes and plan accordingly.

*April 1st, 2025: Vehicle excise duty rates change.

For the latest updates on vehicle excise duty and changes to car tax, be sure to visit the UK government's website. For more expert advice, speak to our dedicated showroom team here at Richmond Motor Group.