The Vehicle Excise Duty (VED) car tax is due to rise in April, but drivers can take action now to avoid paying up to £1,807 more a year
Motorists could avoid looming Vehicle Excise Duty (VED) car tax hikes set for April by following three simple tips. So says a leading expert.
The upcoming changes will see big VED increases for new petrol and diesel van owners. That’s due to changes to first-year rates, with van owners particularly affected – because VED calculations are based on emissions.
Research from Go Compare suggests diesel van drivers could face an annual increase of £1,807.75, while petrol van users could see an additional £1,354.84. These increases are a serious concern for those already financially stretched, especially those reliant on their vans for work.
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However, Tom Banks, a motoring specialist at Go Compare, has outlined some easy strategies to lessen the impact in April. He recommends switching to a cleaner vehicle model as the most direct cost-saving measure, but also advises seeking savings in other areas of motoring expenses, reports the Express.
Tom said: “If you can’t buy a suitable hybrid or electric van, you could go for a ‘nearly new’ one instead. This lets you enjoy a vehicle that’s pretty much as good as new without breaking the bank and means you can dodge the increased tax.”
“Comparing van insurance policies might help you find a provider offering the same amount of protection for less, and finding new ways to maximise your fuel economy could help to cut costs further,” suggests Go Compare. The comparison site predicts that if 2024 sales patterns persist, van drivers will face an additional £15.5 million in costs over the first six months of the new tax year.
Chancellor Rachel Reeves, who noted in her Autumn Budget statement that first-year VED rates would see a rise starting Spring 2025, will have to be aware of these concerns. HMRC says the fee changes were introduced to “widen the difference between zero-emission, hybrid and internal combustion engine cars”.
What is VED and why is the government changing it?
The government has spelt out details of what it is planning to do online. On gov.uk, officials say: “Owners of cars, vans, motorcycles and holders of motorcycle trade licences who will be liable for Vehicle Excise Duty from 1 April 2025.
“This measure will uprate the Vehicle Excise Duty standard rates for cars, vans, motorcycles and motorcycle trade licences (excluding the first-year rates for cars) by the Retail Price Index, and will reflect the inclusion of zero-emission vehicles in Vehicle Excise Duty from 1 April 2025. This is a standard uprating to come into effect from 1 April 2025.”
They say the move has a legitimate “policy objective”. The government says: “Increasing Vehicle Excise Duty rates by Retail Price Index in 2025 to 2026 will ensure that Vehicle Excise Duty receipts are maintained in real terms.”
The measure was announced at Autumn Budget 2024. It is a tax on vehicle ownership, and rates depend on the vehicle type and first registration date. Vehicle Excise Duty rates have increased in line with inflation since 2010.
Gov.uk says: “From 1 April 2025, zero-emission vehicles will be subject to Vehicle Excise Duty. Further information about how Vehicle Excise Duty will apply to zero emission vehicles can be found in the tax information and impact note titled ‘Introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025’.
“From the second year of registration onwards, zero-emission cars will move to the standard annual rate.”