Changes to Vehicle Excise Duty (VED), commonly known as car tax, are coming in April 2025, with significant increases for many drivers. However, certain groups receiving specific benefits and pensions may qualify for car tax exemptions or reductions, offering some relief amidst these rising costs.
Here’s everything you need to know about the upcoming changes and whether you might be eligible for an exemption or reduced rates.
Car Tax Exemptions
If you receive specific disability or mobility-related benefits, you may be eligible for complete car tax exemption. This exemption is available for one vehicle at a time, which must be used solely for the disabled person’s personal needs. Eligible benefits include:
- Higher rate mobility component of Disability Living Allowance (DLA)
- Enhanced rate mobility component of Personal Independence Payment (PIP)
- Enhanced rate mobility component of Adult Disability Payment (ADP)
- Higher rate mobility component of Child Disability Payment
- War Pensioners’ Mobility Supplement
- Armed Forces Independence Payment
Claiming
To claim this exemption:
- Apply for vehicle tax and select the exemption option.
- If applying for a vehicle for the first time, this must be done at a Post Office.
- Each time you change vehicles, you’ll need to reapply for the exemption.
If the vehicle is new and not yet registered in your name, complete a V62 form and include the green ‘new keeper’ slip from the logbook with your application.
Reduced Car Tax
Certain benefits qualify for a 50% reduction in car tax. These include:
- PIP standard rate mobility component
- ADP standard rate mobility component
Important Note
Drivers receiving the lower rate mobility component of DLA are not eligible for this reduction.
Motability Scheme
Drivers receiving mobility components of specific benefits may also qualify for the Motability Scheme, which provides access to a leased vehicle, scooter, or powered wheelchair. This can help those with disabilities maintain their independence and mobility.
Upcoming Changes
Starting in April 2025, car tax rates for new petrol, diesel, hybrid, and electric vehicles will see significant changes:
First-Year VED
First-year tax rates for new vehicles will now be determined by CO2 emissions.
| CO2 Emissions (g/km) | 2024 Rate | 2025 Rate |
|---|---|---|
| 0 (electric vehicles) | £0 | £10 |
| 111–150 | £220 | £440 |
| Over 255 | £2,745 | £5,490 |
For example:
- A Ford Puma driver will face a rise from £220 to £440 in the first year.
- A Range Rover buyer will pay up to £5,490, up from £2,745.
Expensive Car Supplement
Owners of vehicles costing over £40,000 will pay an additional £410 per year for the first five years.
What Does This Mean
While drivers of petrol, diesel, and hybrid vehicles will see substantial increases, electric vehicles remain relatively affordable, with their first-year VED rate capped at £10. Those eligible for car tax exemptions or reductions should act promptly to ensure they benefit from these reliefs amidst rising costs.
SOURCE – LINK
FAQs
Who qualifies for car tax exemption?
Those receiving certain mobility-related benefits.
Can I claim exemption for multiple vehicles?
No, exemptions apply to one vehicle at a time.
What is the new electric vehicle tax rate?
Electric vehicles will pay £10 in first-year VED.
What is the Expensive Car Supplement?
An extra £410 per year for cars over £40,000.
How can I apply for car tax exemption?
Apply at the Post Office or via the VED system.
