Measure
The government will uprate standard Vehicle Excise Duty (VED) rates for cars, vans and motorcycles, excluding first year rates for cars, as well as the Heavy Goods Vehicle (HGV) VED rate, in line with RPI. It will also uprate the HGV Levy in line with RPI.
VED first year rates for new cars, registered on or after 1 April 2025, will change to widen the differentials between zero emission, hybrid and internal combustion engine (ICE) cars. Zero emission cars will pay the lowest first year rate, with rates applied in a tiered system depending on the level of CO2 emissions produced per kilometre.
Owners of cars, vans, motorcycles and HGVs.
These changes will apply from 1 April 2025.
This measure follows previous changes to the VED rates for electric vehicles announced in the 2022 Autumn Statement, as well as a historic VED uprating for cars, vans, motorcycles and HGVs in the 2023 Spring Statement.
The increase in VED rates in line with RPI will ensure that VED receipts are maintained in real terms.
The government cites support in the transition to electric vehicles as the policy objective in the change of first year VED rates. This in turn will support the government in achieving its Net Zero targets.