From car tax to PCP probe - major driving rules and changes launching in 2025
1. Car tax rise
Car tax, officially named Vehicle Excise Duty, will rise from £185 to £190 a year from April 2025.
This is in line with the Retail Price Index (RPI) inflation.
However, those with higher polluting vehicles will pay significantly more in their first year car tax.
Those in Band H, such as the BMW 3 Series and Mercedes C-Class, will see car tax soar from £270 to £680 in 2025.
A BMW X5, which falls under Band K for CO2 emissions, will rise from £1,650 to £2,340.
2. Car tax on electric vehicles
NimbleFins previously reported how electric vehicle (EV) drivers could face up to £600 in additional costs from 2025.
Part of this is down to the Vehicle Excise Duty now being applied to EVs.
Previously EVs were not subject to car tax, but they will be from April 1 2025.
Owners will have to pay £190 a year, putting them on par with petrol and diesel drivers.
New cars are only required to pay £10 for the first year on the road, before moving up to the higher rate.
And because they are now being taxed, EV owners may also now be liable for the Expensive Car Supplement.
Also branded the luxury car tax, the ECS was introduced in 2017 to make owners of cars worth more than £40,000 pay an additional £410 every year.
That's likely to affect a lot of EV owners because they are typically expensive to buy.
NimbleFins research found the average cost to buy an electric car in the UK is around £46,000.
While our research identified some electric vehicle models that cost below £40,000, a Tesla costs upwards of £59,000.
The ECS will only apply to EVs registered on or after April 1 2017, the Government said.
When it comes to car tax, only those registered after April 1 2017 will be liable for the full £190. Those cars registered between March 1 2001 and March 31 2017 will move to the first band with a VED value and will be charged £20.
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3. Car finance investigation
The Financial Conduct Authority has been investigating how car finance interest rates were set by some dealers who sold vehicles on Personal Contract Purchase (PCP).
They are due to report back on their findings in May 2025 and if they rule in favour of customers, it could be as big as the PPI scandal.
Some customers were sold car finance deals unaware that their dealer had been paid a commission by the lender.
And before January 2021, some lenders allowed brokers, such as car dealers, to increase car finance interest rates so they could take a higher commission.
This effectively incentivised brokers to increase interest rates so they could earn more commission.
You can read more about the PCP investigation and whether you could be owed compensation in our detailed explainer article here. Car finance claims - what PCP car buyers need to know
4. New number plates
If you're wanting the most up to date car (or to get a good discount - read more about that below!), the DVLA will be introducing new number plates in March and September 2025.
New vehicles hitting the road in March will have 25 on the plate, while those in September will have 75.
If you don't mind a slightly older-looking model, dealerships often offer good discounts in February and August on the 24/74 plates.
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