Driving is about to get more expensive for everyone in 2025. New vehicles will be subject to a first-year road tax VED, determined by the vehicle’s CO2 emissions and fuel type.
As vehicle excise duty (VED) changes take effect this year, business owners should prepare for increased costs on vans, lorries, and service vehicles. These changes could significantly impact your bottom line.
Starting from April 2025, the first-year rates will range significantly, from as low as £10 for electric vehicles (EVs) to a hefty £5,490 for high-polluting vehicles. And new vehicles aren’t the exception – tax rates are increasing for all vehicle types in April.
The table below outlines these changes, but to work out your vehicle’s tax band, you’ll need to know the year it was registered. Check the V5C logbook for your vehicle and locate the date of first registration on the first page. With the registration year in hand, you can then identify the specific tax band and annual cost for your vehicle.
| VED Band | CO2 emissions (g/km) | First year tax rates 2024 – 2025 | First year tax rates 2025 – 2026 | Standard tax rates 2024 – 2025 | Standard tax rates 2025 – 2026 |
|---|---|---|---|---|---|
| A | 0g/km | £0 | £10 | £0 | £195 |
| B | 1 – 50 | £10 | £110 | £190 | £195 |
| C | 51 – 75 | £30 | £130 | £190 | £195 |
| D | 76 – 90 | £135 | £270 | £190 | £195 |
| E | 91 – 100 | £175 | £350 | £190 | £195 |
| F | 101 – 110 | £195 | £390 | £190 | £195 |
| G | 111 – 130 | £220 | £440 | £190 | £195 |
| H | 131 – 150 | £270 | £540 | £190 | £195 |
| I | 151 – 170 | £680 | £1,360 | £190 | £195 |
| J | 171 – 190 | £1,095 | £2,190 | £190 | £195 |
| K | 191 – 225 | £1,650 | £3,300 | £190 | £195 |
| L | 226 – 255 | £2,340 | £4,680 | £190 | £195 |
| M | Over 255 | £2,745 | £5,490 | £190 | £195 |
Double cab pick-ups reclassified: higher costs ahead
If you rely on a double cab truck for business, brace yourself. From April 2025, these vehicles will no longer qualify as vans for BIK (benefit-in-kind) rates or capital allowances. Instead, they will be classified as passenger cars, dramatically increasing BIK payments. The existing flat BIK rate of around £3,960 per year will be replaced by rates determined under the passenger car rules
However, double cab pick-ups purchased before April 2025 will retain their commercial vehicle status until April 2029, offering some relief for early buyers.
Electric vehicles: no longer tax-free
From 1 April 2025, electric vehicles will lose their VED exemption. New EVs will face a £10 first-year VED charge, followed by the standard £195 annual rate. If you rely on electric vans for business, prepare for this additional cost.
Advisory fuel rates on the rise
Starting 1 March 2025, advisory fuel rates are increasing, which may push up company car expenses. Petrol cars with engines up to 1,400cc will see mileage rates rise from 14p to 15p, while diesel cars up to 1,600cc will also experience higher rates.
Fuel duty freeze: a welcome break
Lastly, some positive news: the current rate of 52.95p a litre, set to end in April 2025, will remain for the 2025/26 financial year. Fortunately there will be no higher taxes at the petrol pumps next year. However, small businesses and commercial vehicle owners should still keep an eye out in case this changes.
Do you have questions about your current business or commercial vehicle cover, or need to find a new policy? With access to a wide range of mainstream and niche insurers, we can help you find the right protection for your business, van and more. Click here to find your local Howden business branch.
Sources: Simply Business, RAC, Fleet News
Also read:
- Car Tax Checker: check if your car is taxed
- 20mph zones – how effective are they?
- Top tips for avoiding a claim crisis
- Your complete MOT checklist
- What MOT Class is My Vehicle?
This is a marketing blog by Howden Insurance.