Major changes to Vehicle Excise Duty (car tax) will take effect from April 1 Electric vehicles (EVs) will lose their tax exemption and face new annual charges EV owners will pay £10 in the first year, then £195 annually - same as petrol cars Luxury car tax for vehicles over £40,000 rises to £425 per year Motorists should consider leasing, second-hand EVs, or incentives to offset costs Major changes to Vehicle Excise Duty, commonly known as car tax, are set to take effect this week, impacting both petrol and electric vehicle (EV) owners. Understanding these changes could help you avoid unexpected costs and make informed decisions about your vehicle use and purchasing choices. Here is everything you need to know. What is vehicle excise duty? Vehicle Excise Duty (VED) is a tax imposed on vehicle ownership, with rates determined by factors such as the vehicle’s age and its CO2 emissions. For an example of costs, a new Volkswagen Golf R petrol model currently incurs a first-year charge of £220, followed by an annual fee of £190. Meanwhile, electric and low-emission vehicles have historically been exempt from these charges - a benefit that is now coming to an end. What is changing? Starting today (Tuesday, April 1), the exemption for electric and low-emission vehicles will no longer apply. This policy change was first announced by then-Chancellor Jeremy Hunt in November 2022 as part of efforts to create what he called a “fairer” motoring tax system. Under the new rules, EV owners will need to pay £10 in VED for the first year after registration. After this initial period, they will be subject to the standard annual rate of £195 - equivalent to what many petrol and diesel vehicle owners currently pay. Another key change is the introduction of the expensive car supplement, commonly referred to as the luxury car tax, which applies to vehicles with a list price exceeding £40,000. Owners of these high-value vehicles must pay an additional annual charge on top of the standard VED rate for the second to sixth years after registration. From April 1, this supplement will rise to £425 per year, making vehicle ownership significantly more costly for those affected. What do the changes mean for me? The changes to car tax are of particular note for EV buyers, as electric models tend to be priced higher than their petrol and diesel counterparts. Many new EVs will now be subject to the expensive car supplement, potentially discouraging some drivers from making the switch to electric motoring. What can I do to offset the costs? With these changes on the horizon, motorists should reassess their options to minimise financial strain. Those considering purchasing an electric vehicle may want to act quickly before the new rules take effect, though with only a day remaining until the changes to car tax come into force, that may be easier said than done. You could also consider leasing instead of buying. Leasing an EV allows motorists to avoid the expensive car supplement and reduces the upfront financial burden. Many leasing agreements also include maintenance costs, which can lead to further savings over time. Another option is to purchase second-hand electric vehicles that were registered before the tax changes take effect, as they may still benefit from the previous exemptions. Car-sharing schemes and salary sacrifice programs for EVs can also provide financial advantages, making it easier to transition to electric motoring without incurring excessive costs. If you already own an EV, be prepared for increased costs. Consider exploring possible grants or incentives that could offset some of the additional charges. Should I renew my car tax today? If your car tax is due for renewal soon, it’s worth checking your renewal date to see if you can delay the impact of the new rates for a little longer. How can I check my car tax? To check whether you need to renew your car tax, how much you currently pay, and what the new charges will be, visit the official UK government website and use the vehicle tax checker. You’ll need your registration number to see your current tax status and renewal date. The Government’s VED rate tables can also help you compare what you pay now with the costs coming in from April 1. Is anyone exempt from car tax? Yes, certain drivers and vehicles are exempt from road tax in the UK. Disabled drivers, for instance, can apply for full exemption if they receive specific disability benefits, such as the higher rate mobility component of Personal Independence Payment (PIP) or Disability Living Allowance (DLA). The vehicle must be registered in the disabled person’s name or be used solely for their benefit. Vehicles that are over 40 years old, as long as they are not used for commercial purposes, are also exempt from road tax. Certain vehicles used for agriculture, forestry, or similar purposes can also be exempt, depending on their use. What do you think about these car tax changes? Will they affect your decision to buy or lease an electric vehicle? Share your thoughts in the comments section.