April could be a challenging month for UK car owners with several car tax changes – although a fuel duty freeze could help. HMRC has confirmed the extension of the 5p per litre cut on fuel duty.
This reduction was initially implemented in 2022, lowering fuel duty to 52.95p per litre. The freeze was set to end this month, but has now been extended until March 2026 and a planned increase in line with inflation has also been cancelled, providing some relief for motorists.
However, as drivers save on these charges, others will face significant increases next month as vehicle and road taxes change. Electric Vehicle (EV) owners, who have previously been exempt from road tax, are expected to be particularly affected by these changes.
From April, EV owners could be liable to pay up to £620 in road tax. EVs registered between April 1, 2017, and March 31, 2025, face an annual charge of £195.
EVs purchased after April 1 this year will be charged £10 for their first year, which will then increase to the full £195 in the subsequent tax year.
Mike Vousden, Motorpoint’s resident EV expert, has shed light on the anticipated changes to vehicle excise duty for electric car owners: « At a simple level, as more car owners make the move to electric, the current exemption means that fewer motorists are paying vehicle excise duty (also known as road tax). So, there’s less tax being collected from motorists.
« The government is also losing out on fuel duty as EVs don’t require petrol or diesel, which has tax baked into the price at the pump. The government has predicted that the loss of these two major sources of motor taxation could result in a ‘£35 billion black hole in finances’ – making the current system unsustainable. »
Additionally, electric vehicles (EVs) with a price tag over £40,000 will be subject to the £425 Expensive Car Supplement, often referred to as the luxury car tax.
While this might appear to be a hefty new tax burden, owners of petrol and diesel cars will face similar increases. The amount of car tax due in the first year for these vehicles is determined by their CO2 emissions.
The RAC reports that hybrid vehicles emitting under 50g/km of CO2 will see an increase in tax from £10 to £110. Cars that emit between 51 and 75 g/km of CO2 will have their tax rate raised from £30 to £135 and this staggering trend of increases continue for cars emitting higher concentrations of CO2.
More information about car tax changes can be found on the Gov.uk website.
