Introduction
Car tax changes in April 2025 reshaped how millions of UK drivers pay to keep their vehicles on the road. Electric vehicles entered the Vehicle Excise Duty (VED) system, the luxury car supplement increased, and Benefit-in-Kind (BiK) rates rose for company car drivers.
To keep up with these changes and avoid fines, many drivers continue to use TotalCarCheck.co.uk, which provides a free and instant car tax check by registration number.
The April 2025 Car Tax Changes
Electric Vehicles Started Paying VED
From April 2025, electric vehicles (EVs) lost their exemption from Vehicle Excise Duty (VED). Consequently, EV owners started paying the standard annual rate, which aligned their costs with petrol and diesel drivers. This change marked the first time EVs contributed to VED revenue on the same terms as conventional vehicles.
Emissions-Based Bands Revised
The government also revised VED bands for petrol and diesel cars. As a result, higher-emission vehicles are more expensive to own. For instance, cars producing over 255 g/km CO₂ now face first-year tax bills of up to £5,490. Therefore, drivers of older, more polluting cars have to plan for significantly higher costs.
Luxury Car Supplement Increased
The annual luxury car supplement increased to £425. This charge applies to cars with a list price above £40,000 for the first five years after registration, covering petrol, diesel, hybrid, and electric models alike.
Company Car Tax (BiK) Rates Rose
Benefit-in-Kind (BiK) applies when employees use a company car for personal travel. The government calculates BiK based on the car’s CO₂ emissions and list price. In April 2025, the BiK rate for EVs and plug-in hybrids rose from 2% to 3% for the 2025/26 tax year. Looking ahead, further increases are scheduled, gradually narrowing the tax advantage of electric company cars.
How Drivers Check Car Tax Changes
Because so many changes arrived at once, drivers needed a simple way to confirm their tax position. Many turn to TotalCarCheck.co.uk, which shows whether a car is taxed, when renewal is due, and which tax band applies.
Why Car Tax Changes matter
These tax changes affect both everyday motorists and fleet operators. Fully electric car drivers now pay VED, owners of expensive cars face higher annual costs, and company car users pay more BiK. Missing tax payments can lead to fines, penalties, or even having vehicles clamped.
What’s Expected in 2026
Annual Uprating of VED
From April 2026, most VED bands are expected to increase in line with inflation. Therefore, standard cars could see an extra £5 a year in tax. But with the Chancellor seeking more tax revenue higher tax increases may become a reality.
BiK Rates Continue to Rise
BiK rates for EVs and plug-in hybrids will continue to climb:
- 2025/26: 3%
- 2026/27: 4%
- 2027/28: 5%
- Rising gradually to 9% by 2029/30
This means EVs remain attractive but less tax-advantaged than before.
The Future of UK Car Tax: Pay-Per-Use on the Horizon?
Looking further ahead, the government faces a major challenge. As EV adoption accelerates, fuel duty revenues continue to decline. Since fuel duty has historically made up one of the biggest streams of motoring tax, ministers must explore alternatives.
To replace this lost revenue, policymakers have been exploring alternatives, including:
- Road pricing / pay-per-use systems
Drivers could be charged based on mileage, time of day, or location, rather than an annual flat tax. - GPS-based road charging
A system where vehicles are tracked and charged per mile, potentially with higher rates for congested urban areas. - Congestion-style national schemes
Similar to London’s Congestion Charge, applied nationwide for certain vehicles or areas.
While no formal system has been announced yet, discussions around pay-per-mile road pricing were gaining momentum. However, in 2024 ministers under the new Labour Government announced they had no plans to introduce pay-per-mile road pricing schemes.
Where to Find More Information
Drivers who want to see the latest official rates can view the Gov.uk Vehicle Tax Tables. These show:
- First-year and standard rates
- CO₂ emissions-based bands
- Luxury car supplement details
- Company car BiK percentages
Alongside this, TotalCarCheck.co.uk remains the easiest way to check your individual vehicle’s tax, MOT status and get other important car insights.
Conclusion
The April 2025 car tax changes marked a turning point for UK motorists. EVs entered the tax system, the luxury car supplement rose to £425, and company car BiK rates began climbing.
In 2026, modest annual increases are expected, but in the longer term, if pay-per-use road charging gains traction it could redefine how drivers contribute to the road network. However, the alterative could see us keeping the existing tax schemes and potentially higher car tax for polluting vehicles as the EV transition gathers pace.
To stay informed, check your car’s tax status for free at TotalCarCheck.co.uk and keep an eye on the official Gov.uk tax tables for updates.
